Homeowners have plenty of opportunities to lower their tax bills, thanks to Uncle Sam. Make sure you're getting everything you're entitled to with...
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Homeowners have plenty of opportunities to lower their tax bills, thanks to Uncle Sam. Make sure you're getting everything you're entitled to with this list of tax write-offs associated with the home.
For homeowners who qualify, the mortgage interest paid on their primary residences is completely tax deductible. The interest on home equity loans, home equity lines of credit, and other types of mortgage loans may also be deducted in certain cases.
If you (or the seller) paid points at closing on your first mortgage loan, you qualify for another tax deduction. The same rule applies if you refinance; however, in the case of refinancing, you spread this deduction out over the loan's lifetime rather than realizing the benefits all at one time.
Any state, local, or foreign taxes paid on a property that you own are almost always tax deductible. There is no limit on the number of homes that can qualify for the deduction, so you can use it on rentals, vacation homes, and investment properties in addition to your primary residence.
Did you relocate more than 50 miles for a job? If so, you qualify for all sorts of deductions, including the cost of moving your household contents and vehicles. The deductions must be reasonable, however, and they must be associated directly with the move.
If some portion of your home is used for business purposes, you may have a number of deductions available to you. For example, you can deduct the cost of maintaining that space, as well as an applicable portion of other expenses such as utilities, garbage pick-up, and maid service. The catch is, the space you use to claim this deduction must be used exclusively for business purposes.
If you've made any energy-saving improvements to your home, you may be eligible for credits ranging from $500 to $2,000. Such improvements include adding insulation, solar panels, or energy efficient windows. In some cases, you may be able to get a credit for purchasing a new, more energy efficient appliance.
Home improvements that need to be made for health reasons can be written off. For example, if you have a respiratory problem and your doctor says air conditioning will help (and puts this recommendation in writing), you can deduct the expense of adding a cooling and filtration system to your home. The same rule applies to wheelchair ramps, chairlifts, elevators, widened doorways, Jacuzzis, and other medical-related improvements. If you would not have made the change if it weren't for the medical condition, you should qualify for this deduction.
If you live in a president-declared disaster area and have experienced uninsured property damage resulting from a flood, hurricane, earthquake, tornado, fire, or other natural disaster, tax relief is available in the form of current year and retroactive deductions.
If you have a home you're renting out to tenants, you are legally obligated to keep it in livable condition. Fortunately, the cost of repairs like repainting, window replacement, and re-roofing are typically tax deductible in the year you make the repair. Of course, this rule applies only if you are currently renting the home. If you make repairs prior to renting, they are classified as improvements. Deductions may still be taken for improvements, but these must be added to your cost basis and depreciated later on when the property is rented.
Specific stipulations may apply to tax write-offs. To be sure of your eligibility for any given tax deduction, speak to a certified accountant or visit the IRS website (irs.gov).
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