Not only do Observatory Park homeowners get the joy of knowing that they live in their own home, but they also get a few breaks every tax season. If you buy a home this year, here are some of the tax breaks you may qualify for when you file your taxes in 2018:
Property Tax Deductions
Unlike renters, homeowners have to pay an annual property tax on their home. But luckily, this is a deductible expense, so be sure to provide your accountant with the bill and proof that you paid it.
Do you plan on getting a mortgage to buy a new home? If so, you will have additional deductions when tax season comes around next year. First, you can deduct all of the mortgage interest payments you’ve made on your new home. You can deduct any mortgage interest payments made towards your first mortgage, second mortgage, or home equity line of credit (on loans less than $100,000).
If you are required to pay private mortgage insurance to your lender, these payments can also be deducted as long as your income is not too high. The income limit changes slightly on an annual basis, so check with your accountant to see if you qualify for this deduction next year.
If you pay “points” to the bank when you purchase your new home so you can get a better mortgage rate, you can also deduct this expense. Points are typically about 1% of the total loan, so this can be a sizeable deduction if you bought a pricey home.
Property Damage Losses
Was your new home damaged in a flood or by a fallen tree? If you were not reimbursed for the damage by an insurance company, you may be able to deduct the cost of repairs. But, this does not apply to minor repairs. You only qualify for this deduction if the cost of repairs exceeded 10% of your adjustable gross income.
Energy Efficient Upgrades
Did you make any energy efficient upgrades to your home once you moved in? You may qualify for additional tax deductions. Right now, there are several tax credits available that reimburse homeowners for certain energy efficient upgrades. However, all of them with the exception of the solar tax credit expired at the end of 2016. This means you would be able to take advantage of them if you bought a home last year, but not if you buy a home this year.
The solar tax credit, which has been extended through 2021, allows homeowners to deduct 30% of the cost of installing solar energy systems in their homes. This tax credit will drop down to 26% of the cost in 2020, and 22% in 2021, so take advantage of it while it’s still at 30%. Learn more about energy efficient federal tax credits
Ready to buy a home so you can take advantage of these tax breaks next year? Contact Elevation Realty
to be connected to a team of experienced real estate experts ready to help you on your home buying or selling journey.