07 Dec More Tax Breaks for Homeowners
One of the greatest benefits of homeownership is the ability to deduct some of the expenses on your taxes annually. From the time that you buy your home until you have sold the property, there are ways to counteract the expenses of homeownership with these tax breaks. You will first need to determine your standard deduction amount, as itemizing to claim the following tax deductions requires foregoing this amount. Next, calculate how much the following items will save you combined with any other itemized deductions, and make sure that their amount exceeds the standard deduction so that you can receive maximum savings.
On both your primary residence and secondary residence, you are able to deduct the interest from your mortgage payments on your taxes. Though the deduction on your federal income taxes is capped at loan amounts of $750,000, you may still be able to deduct larger amounts if your mortgage has been in place since before 2017. This applies to both single taxpayers, and married taxpayers who choose to file jointly. However, for married couples who file their taxes separately, the maximum is halved.
Home Equity Line of Credit Interest
If you have taken out a home equity line of credit to purchase a new home, build a new home, or improve an existing home, the interest that you pay may be tax deductible. Before 2018, the purpose of the loan was not a factor, and the funds could be used to pay off credit card debt, for a college fund, etc. However, the Tax Cuts and Jobs Act (TCJA) placed these additional requirements on home equity deductions. The remaining available deductions count towards the mortgage interest deduction loan limit, which is currently $750,000.
When preparing to sell your home, you may need to make some improvements or complete repairs. Luckily, if these renovations take place within 90 days of your closing date, you should be able to deduct them. Additional costs related to the sale of your home can also be deducted, as long as you have maintained a record of those expenses. These fees may include hiring a real estate agent and attorney, advertising costs, escrow, and more. You can even include any pre-sale home inspection and the cost of staging your home for open house viewings. There are a few guidelines for this exclusion. The home needs to be your primary residence for two out of the last five years, and you cannot have used the exclusion in the past two years. Married homeowners must file jointly in order to apply as well.
If you have any questions about your existing or potential home loan and all the benefits of homeownership, reach out today to Fairway Independent Mortgage Fort Lauderdale! If you’re currently renting, and considering a first-time home purchase, we are happy to assist in making your experience stress-free.