Savings from Uncle Sam: 5 Common Homeowner Tax Deductions You Need to Know About Published by: Agnes Halmon, April 13, 2016
As a homeowner, you can take advantage of a few different take deductions to keep more money in your pocket. In fact, the National Association of Realtors reports that homeowners save an average of $3,000 on property tax and mortgage interest deductions alone.
As the April 15 tax deadline approaches, make sure you capitalize on these five common, but all too often overlooked, homeowner tax deductions. A qualified tax professional can help you navigate the various subtleties and requirements of each deduction to ensure compliance.
Homeowners can deduct qualifying home mortgage interest on both a primary residence and, in many cases, a secondary residence. In addition, mortgage interest on a refinance or home-equity line of credit can also be deducted. If you pay private mortgage insurance (PMI) or points on a home mortgage, odds are good you can also deduct that expense as well.
Homeowners are able to deduct property taxes during the year they are paid. If you’re a recent homebuyer, you can also deduct any property taxes for which you covered the seller; you can find that amount in your closing documents.
Home improvement purchases such as storm doors, windows, insulation, heating, and air conditioning systems that hit certain energy-efficient thresholds often qualify for deductions. It’s not much, capping out at $500, but every little bit helps.
If you work from home, the IRS permits you to deduct expenses for a qualified home office, which can include a phone line, Internet access, and utilities like heat and electricity. Those with a home office can also deduct a portion of mortgage interest, property taxes, and insurance.
First-Time Home Buyers
If you’re a first-time homebuyer, note the MCC (mortgage credit certificate) program. A certificate authorized by the Federal Government, the MCC allows first-time homebuyers to take 20 percent of their annual mortgage interest paid as a dollar-for-dollar reduction to their annual federal income tax liability.