01 Oct Tax Deductions for Homeowners
When thinking of tax breaks for homeowners, the first and perhaps only possibility that comes to mind is the mortgage interest paid every month. However, other deductions are possible as well — even for homes besides your primary residence. By researching your options and making sure you know all of the possible benefits, the following yearly tax deductions can ease the monetary burdens of homeownership:
Your property taxes can be deducted as part of your state and local tax deduction. If you recently purchased your home, keep in mind that you are not able to include escrow money held for property taxes until the taxes have been paid from that account. In 2018, an annual cap of $10,000 was placed on property tax and other state and local taxes for both single and married taxpayers. While this deduction can be very beneficial if you live in an area with high property taxes, you may not be able to deduct your full amount each year.
Private Mortgage Insurance
If PMI was required when you purchased your home, you will receive an amended Mortgage Interest Statement from your lender, allowing you to itemize your deductions if you qualify. While the ability to deduct private mortgage insurance was briefly taken away in 2016, it was reinstated in 2017. This deduction is typically claimed by lower- and middle-class families, as others may have higher income that disqualifies them from the benefit.
If your home is also where you conduct business professionally, you may be able to deduct costs on upkeep and repairs of the office area. Your qualification status for the home office deduction is determined each year and is dependent on many factors, including business type, square footage and time spent occupying the space for customer/client-facing activities.
Medical Home Improvements
Any changes made to your home out of medical necessity can be considered for the medical health deduction. These home updates can range from minor expenses to large improvements. Here’s the caveat: To qualify for these deductions, you must make sure the changes do not significantly increase the value of your home before attempting to deduct the full amount.
Mortgage Points are fees charged by your lender, where one point is equal to one percent of your loan principal. These can be fully deductible at once for home purchase loans, and partially deductible on refinanced loans, over the life of the loan.
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!