Surprising Tax Credits for Home Owners

Homeownership is one of the most complex investments that any human makes, but property entertained, it can be one of the most rewarding. The government gives plenty of incentives in exchange for private citizens taking care of the land, and there are many tax credits for home owners that you may not even know about. Here is the latest news about tax credits that you may be able to apply to your own property.

Am I taking the mortgage interest deduction?

Taking a percentage of the interest that you pay on your mortgage out of your taxes is perhaps the most lucrative tax deduction available to the average person. The interest on up to $1 million on the first and secondary mortgage can be deducted from taxes. Although no amount above that is tax deductible, if you can afford a house that is above that amount, you are probably not worried about taxes as much.

What is the non business energy property credit?

The non business energy property credit gives you a tax benefit for green energy improvements that you make on your property. If you add energy efficient roofing, insulation, windows or doors to your house, you can claim up to $500 in lifetime credits directly from the price of the improvement.

What is the residential energy efficient credit?

Many people believe that the energy property credit and the energy efficient credit are the same thing, and you should not make this mistake: If you buy and install alternative energy hardware to your home, you can write off up to 30 percent of the cost. Unlike the property credit, there is no maximum limit, and you can also carry the credit that you earn forward until you use it up entirely. An example of improvements that might qualify here includes solar water heaters, solar panels, or wind turbines.

What about mortgage points?

Mortgage points may seem like a hassle when you pay them up front; however, they become a tax benefit to you for the rest of your loan term. If you pay your loan off before the term is up, then you can further deduct your leftover points on the next tax report.

Can I take a benefit from a home equity line of credit (HELOC) or a home improvement loan?

The government actually gives a benefit for improving your property if you need to take out a HELOC in order to do it. Just like a normal mortgage, the interest that you incur on a HELOC is tax deductible with limits. You can deduct the lesser of your home value minus debt or $100,000.

Can I take a benefit if I pay private mortgage insurance (PMI)?

PMI is an extra payment that gets tacked on alongside your monthly mortgage payment if you bring less than 20 percent to the table upfront. PMI protects the bank from the lack of equity that you have in the home, but it also gives you a tax benefit that you will need if you are forced to pay it. However, your adjusted gross income must be less than $109,000, with the benefit phasing out starting at $100,000.

Can I take a tax deduction from a tax?

You can actually take a tax deduction from a tax when it comes to property tax. The amount of property tax that you pay can vary depending on your state, and states like New Jersey and New York can become quite expensive. Make sure that you do not forget about this somewhat confusing but nonetheless quite valuable tax deduction.

Are there any deductions that come from natural disasters?

You can actually get a tax deduction if you are the victim of a natural disaster. If the federal government has declared your county or city a federal disaster area, then you may be able to claim a loss on your taxes this year.

Is there a home office deduction that I can take advantage of?

Your home office can be a source of many tax deductions if you keep up with your records. The Internal Revenue Service does take these sorts of home office deductions more seriously than others, so back up all of your records and keep them with a professional accountant if your primary source of income comes from the home office.

You can take the home office deduction based on the square footage of your office space as a flat rate, or you may itemize all of your business expenses. Because of the scrutiny of the IRS, it is usually best to itemize. If you take the flat rate discussion, take pictures of your home office, as the IRS will want to make sure that you are using this portion of your home specifically for business and nothing else.

Depending on the year, you may have more or less tax deductions from your home. Keeping up with these rules can be quite taxing, and you may want to employ a professional tax accountant and attorney, especially if you have a home office. Regardless, staying with the latest rules for the current tax year will always give you the best results.

2 Point Highlight

Many people believe that the energy property credit and the energy efficient credit are the same thing, and you should not make this mistake: If you buy and install alternative energy hardware to your home, you can write off up to 30 percent of the cost.

The Internal Revenue Service does take these sorts of home office deductions more seriously than others, so back up all of your records and keep them with a professional accountant if your primary source of income comes from the home office.