Real Estate Company in Springtown – When it comes to owning a home, there are all sorts of amazing tax benefits that are involved. There are also many homeowners who continue to look into this very thing now that tax season is upon us, especially since the new Tax Cuts and Jobs Act was signed into law on January 1, 2018 by Donald Trump. Thanks to this, there are all sorts of changes to taxes, especially when it comes to the tax perks of homeownership.
Here are four of the biggest tax benefits of owning a home.
Perhaps one of the biggest tax benefits of owning a home involves energy efficient upgrades, as the Residential Energy Efficient Property Credit was a tax incentive involved with installing alternative energy upgrades in homes. While many of these tax credits expired after December 2016, there are two credits that are still in existence, as the ones for solar electric and solar water heating equipment remain available through December 31, 2021. Additionally, the Secure Act retroactively reinstated a deduction of $500 for specific energy efficient upgrades like exterior windows, doors, and insulation.
Another tax break of owning a home involves home offices, which is good news for those who are self employed and whose home office is their main place of work. This means that they will be able to deduct $5 per square foot, up to 300 square feet, of office space. This amounts to a maximum total deduction of $1,500. However, it’s important to note that there are strict rules regarding what constitutes a fully deductible home office space, as if you occasionally work from home but also have an office to go to, you will not be able to take advantage of this deduction.
One other useful tax break involving owning a home includes home improvements to age in place. In order to obtain this break, these specific improvements must exceed 7.5% of your total adjusted gross income. This means that, for instance, if you’re someone who makes $60,000, then this deduction will kick in only on money that is spent over $4,500. The total cost of these improvements will result in a decent tax break for older homeowners who have made plans to age in place, as well as add renovations such as grab bars and wheelchair ramps. Additional renovations could include lowering cabinets, widening doorways, and more. However, it’s important to note that a letter from your doctor is required in order to prove that these types of changes were medically necessary.
Private mortgage insurance is another great tax break involved with owning a home. This means that if you put down less than 20% on a home, this means that you are likely paying private mortgage insurance. This is something that can end up costing anywhere between 0.3% and 1.15% of your home loan. The good news is that you will be able to deduct the interest on this insurance thanks in large part to the 2019 Mortgage Insurance Tax Deduction Act, which is also commonly referred to as the Secure Act.
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