Being a homeowner is often a big financial investment, from the down payment to home maintenance and improvements. But there are ways to save when you own a home, too — particularly on your annual tax returns.
Homeownership typically comes with a number of tax deductions and credits that aren’t available for renters. Are you ready to save on your tax bill? Here are some perks you should have on your radar as you file your taxes.
- Mortgage Interest: You probably pay a notable amount of interest on your mortgage loans each year, especially early in your home loan term. Fortunately, you should be able to write off some of what you paid in interest. You can also deduct any interest you prepaid when closing on your loan (or refinancing).
- Property Taxes: Depending on where you live, property taxes can be quite costly. You can deduct them from your taxable income up to $10,000 each year.
- Home Office Expenses: If you're self-employed and run your business in your home, you may qualify for a deduction. This does not apply to those who work from home for an employer, and you must use your home office exclusively and regularly for your work.
- Eligible Home Improvements: Not all home updates allow for tax deductions, but you can claim tax breaks for some improvements that make your home more energy efficient (like a solar water heater). You could also claim improvements that qualify as medically necessary under capital expenses (like installing ramps for mobility).
