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TAX DEDUCTIONS HOMEOWNERS NEED TO KNOW
Spend Less on Taxes; Invest More Into Your Home
March is here, and that means your taxes are due in 45 days! The tax system can be stressful, and as a homeowner, every tax-related worry and question you have can compound the stress you already have. If you haven’t filed your taxes yet, there are some deductions you need to know about as a homeowner. Mortgage Insurance Premiums Regardless of what it’s for, insurance isn’t something anyone loves to pay. This is no surprise, as the average mortgage insurance premium is at least $100 a month. Lenders require mortgage loan insurance if homeowners don’t have at least 20% equity in their house. The insurance is meant to cover the lender in the event of a default. However, you can deduct the insurance payment on a primary or secondary home. Points and Closing Costs Points, also known as loan origination points or loan discount points, are used to prepay mortgage interest. Since mortgage interest is deductible, your points might also be deductible if you purchased your home in 2019. Other closing costs that are tax deductible include property taxes. Home Office If you primarily run your business out of your house, conduct regular business meetings there, or spend a significant amount of time using your home office, you might be able to deduct some expenses. Itemize everything you deduct, though, as substantial deductions in this category usually trigger an audit. A great rule of thumb is to base your deduction on what percentage of your space you devote to your home office. Common deductible expenses include a percentage of mortgage interest, real estate taxes, insurance, utilities, repairs, and home depreciation. Moving Costs If you had to move in 2019 due to starting a new job that’s more than 50 miles from your last home, you qualify for a residential moving cost deduction. This
deduction includes any costs associated with the move except for meals.
Accidental Loss If you’ve experienced an unusual event like property damage from a natural disaster, there is a silver lining. If your losses exceed more than 10% of your income, you can deduct the amount remaining that your insurance can’t cover.
Solar Energy Take advantage of going green with these tax benefits! If you have installed solar panels this year, you can deduct 30% from the investment. This includes equipment, permit, and installation costs. Capital Gains You can exclude up to $250,000 of the capital gain on the sale of a primary residence. If you’re jointly filing with your spouse, you can exclude up to $500,000. However, you will have to pass an ownership and usage test. The general rule is if you’ve lived in your home for 2 out of the 5 years before the sale, you will easily pass the test.
Navigating these tax exemptions is a complex task to handle. If you have any questions or concerns, feel free to reach out anytime. You can call our offices at 208.283.1602 or visit our website at DrewSells.com. —Drew Taylor 205.283.1602 firstname.lastname@example.org
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