Don’t overpay! Know the write-offs Uncle Sam doesn’t want you to know
As you embark on yet another tax season, make sure not to overlook the financial benefits of homeownership. From deductions that can shave thousands off your yearly IRS bill to other potential credits and incentives, making the move from renting could put more money in your pocket this time of year! Get educated by reviewing our list so you know what questions to ask when consulting with a tax advisor - familiarizing yourself now may mean greater rewards at filing time.
Mortgage Interest: If your home was purchased prior to December 2017, you may qualify to deduct the a mortgage interest on your first $1 million in mortage debt. For mortgages taken out after that date, you may be able deduct on the first $750,000. To determine if itemizing or taking the standard tax deduction will best benefit you financially can be tricky; so discussing it with an accountant would provide some much needed guidance in making this important decision. Depending on which route ends up being most advantageous – either claiming deductions from your taxes or filing via 1040-EZ - make sure to crunch those numbers first before submitting!
Property Tax: As an owner of a home, you can enjoy the full tax deduction of property taxes. When buying or selling residential real estate, be sure to take into account any prepaid property taxes for periods during which ownership is transferred - these amounts are all eligible for deductions when filing!
Credit for green improvements: Not a tax break but a credit. Homeowners can now enjoy up to $500 of Federal Tax Credit for implementing energy-efficient upgrades such as water heaters, furnace, boiler, and others. Make the smart choice today and save money on your federal income tax while ensuring a greener tomorrow.
Investment Property/Rental Property:Investing in rental property offers savvy entrepreneurs the opportunity to maximize their return on investment and reduce their tax liability. Maintenance, marketing costs (such as mortgage interest payments, insurance premiums and advertisement expenses) can all be deducted from income generated by that property. Furthermore, even non-cash depreciation cost associated with maintenance is taken into account when assessing taxable gains or losses incurred through ownership of an investment/rental residence.
Home Office: Working from home offers the opportunity to deduct costs associated with your principal place of business, but be aware: claiming this deduction has gained a reputation for triggering tax audits. Before you pursue any deductions, consult an accountant and make sure that your specific situation qualifies.
Tax-free rental income: Maximize your rental income. Take advantage of the tax-free benefits available for those who rent out their homes for 14 or fewer days a year - all without having to worry about paying extra taxes on this source of additional income!
Capitol Gains: With the potential to save hundreds of thousands, selling your principal residence may be more lucrative than you had originally thought. According to IRS guidelines, individuals can generally expect up to $250k in tax-exempt capital gains for single persons and a generous allowance of $500K for couples filing joint returns. Selling an investment property? Consider taking advantage if 1031 exchange - with expert advice from myself as well as other industry professionals this could help minimize or avoid capitol gains all together! For further information on how best capitalize on these opportunities please don't hesitate reach out so we can discuss them in greater detail.
Homeownership offers a range of tax benefits, and utilizing them will have your wallet thanking you every April. That extra money can be put towards much-deserved shopping sprees or even an extravagant getaway-- the possibilities are endless! For those in need of professional assistance when filing taxes this year, there's no need to worry: I've got resources that my clients absolutely love. Let me know if you're interested - now it’s time for the big question: what would you do with that refund check?
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