Tax Breaks for Homeowners

Ahhh… homeownership. If you’re one of the lucky ones living the American dream, you know that owning a home isn’t always a walk in the park. Chores, repairs, replacements… But come tax season, there’s something you get to look forward to: tax breaks! Yes, if you’re a homeowner, there are multiple tax breaks you can claim: 
Interest on Your Mortgage – A 1098 from your lender will tell you how much interest you’ve paid on your mortgage for the year. You can deduct 100 percent of this if your loan is less than $1 million, or $500,000 if married and filing separately. For loans over that amount, there are limits on your deduction. To make this claim, you have to itemize, which takes some time and thought but is worth it.
Property Tax – Property taxes can be deducted on federal returns, but not always state returns. Property taxes are usually paid as part of your monthly loan payments, so you can find the amount you paid for the year on the annual statement from your lender.
Energy-Efficiency Improvements – Homeowners with qualified energy-efficient property such as solar electric systems and solar water heaters are eligible for a 30 percent credit of expenditures on that property for the year. No cap exists on the amount of credit, and it extends through Dec. 31, 2021.
Disaster Damage – If your home was damaged by a disaster this year like a hurricane or fire, you might be able to claim losses that weren’t reimbursed by insurance. While a professional can help you with this, you can figure out your deductible damage by taking your Adjusted Gross Income (AGI), multiplying it by 10 percent, then subtracting that number plus $100 from amount you were not reimbursed.
Closing Costs – If you purchased a home this year, any origination fees you paid your mortgage lender at closing are deductible – even if your lender paid the closing costs. Find the exact amount on your HUD-1 settlement statement from your escrow provider or title attorney.
Ask a professional about these tax breaks and any other breaks you might be able to take advantage of as a homeowner. When filing taxes, it is always best to seek advice from a tax advisor or accountant based on your particular circumstances.