Home Tax Write Offs – Tax Deduction Ideas For Every Homeowner

Home Tax Write Offs come in a variety of ways. Below you will find 10 home tax write offs you may get this tax season if you are a homeowner. To confirm or take action on any of the below tax write offs please consult with a tax professional.

Mortgage Loan Interest

This is one of the best tax breaks your home has to offer. In the early years of a loan, interest payments constitute a large portion of your mortgage payments. As such, as you file your income taxes every year, you will be able to deduct your mortgage interest that you pay. In fact you can deduct a sizeable amount of mortgage interest secured by a primary residence and second home. Home equity loan interest is also deductible, but is limited to a much smaller amount. To find out the specifics of this tax year to tax year, you will need to consult with a tax professional.

Points

You can fully deduct points associated with a home purchase mortgage. You can also deduct refinanced mortgage points, but only when they are amortized over the life of the loan. If you refinance a second time, the balance of the old loan’s points from a refinanced loan provides an immediate write-off, as you begin to amortize the new points.

Home Improvement Loan Interest

Interest on a home improvement loan is also deductible, but is calculated differently from interest on your mortgage. You can deduct all of the interest on a home improvement loan if the work is a capital improvement (improvement that adds value to your home, adapts it to new uses, or prolongs its life) rather than repairs, maintenance or cosmetic. You can only get tax benefits from repair work when you sell your home, unless you get a home equity loan to make the repairs.

Property Taxes

Any property or real estate taxes are fully deductible. If you receive a city or state property tax refund, your federal property tax deduction will be reduced by the same amount.

Capital Gains Exclusion

Provisions in the US Tax Code allow married taxpayers who file jointly to retain a significant amount of profit on the sale of a home used as a principal residence for two of the prior five years tax-free. Again, the amount is halved for taxpayers who file separately or as a single. This tax break can be used as often as you qualify.

Selling Costs and Capital Improvements

When you sell your home, your taxable capital gains can be reduced by the amount of your selling costs, including title insurance, real estate commissions and legal, advertising and inspection fees. Decorating or repair costs, such as painting, planting landscaping or cleaning carpets, are also considered selling costs if they are incurred within 90 days of the sale and with the intention of making the home more sellable.

Moving Costs

If you have to move for a job, your moving costs may be at least partially deductible. You must, however, move within one year of starting your new job, move 50 miles farther from your old home than your old job was, and work full-time at the new job for 39 of 52 weeks following the move. Deductible costs include storing your household goods and travel and transportation costs.

Energy Tax Credits

If you upgrade your heating and air conditioning, caulk leaks, add insulation, install energy-efficient windows or do other improvements that combat energy waste you may be eligible for some energy tax credit and tax write offs. Certain qualified solar energy and fuel cell systems can earn you tax credits. You can also earn a tax credit for purchasing a hybrid or other energy-efficient vehicle. Keep in mind, however, that some states offer rebates or tax credits that can reduce the federal credit.

Home Office Deductions

If you have a home office that is used exclusively for business, you could deduct a portion of the costs related to that portion of your home, including a percentage of your insurance and utility costs, among other things.

Mortgage Tax Credit

Qualifying low-income, first-time homebuyers can take advantage of Mortgage Credit Certificates (MCCs) that allow them a credit of up to 20 percent of the mortgage interest payments made on their home. The credit is available each year you live in the home purchased with the certificate, with the same loan. Instead of reducing your income, this credit is subtracted from the amount of income tax you owe. These certificates are available through most state housing financing agencies.

Always remember, US Tax Laws change from year to year, so there may be changes and additions to the following information, again check with a tax professional for the exact tax write offs you may qualify for as a homeowner.