Tax season is here! While most people dread filing their returns, homeowners have a reason to celebrate—potential savings! Owning a home isn’t just about having a place to kick back; it also comes with some serious tax perks. Whether you're a newbie to homeownership or a seasoned pro, let’s break down how your home can put some money back in your pocket this tax season.
One of the biggest perks of owning a home is the potential tax deductions. Here are some key deductions homeowners may qualify for:
Got a mortgage? You could deduct the interest you paid on a loan up to $750,000 (or $1 million if you bought before December 15, 2017). Your lender should send you a Form 1098—don't let it get lost in the pile of mail!
If you paid property taxes, you could deduct up to $10,000 in state and local taxes. That’s a solid way to ease the sting of those yearly tax bills. This can provide significant savings, especially in areas with high property tax rates.
If you’re paying private mortgage insurance (PMI) or mortgage insurance premiums (MIP) on an FHA loan, you may be able to deduct those costs, depending on your income level.
If your home doubles as your office, you may be eligible to deduct a percentage of utilities, mortgage interest, and even home depreciation. Just make sure your workspace meets IRS requirements—no counting your couch as an “office.”
Upgraded your home with solar panels or energy-efficient improvements? You might qualify for the Residential Clean Energy Credit. Saving the planet and money? That’s a win-win.
Selling your home soon? Good news—there are tax breaks for that too!
If you’ve lived in your home for at least two of the last five years, you may exclude up to $250,000 in profit ($500,000 for married couples) from capital gains taxes.
Major renovations that increase your home’s value may be added to your home’s cost basis, reducing the taxable gain when you sell. Keep those receipts!
Owning a home isn’t just a milestone—it’s a smart financial move that can pay off big time during tax season. By understanding what deductions and credits apply to you, you can maximize savings and keep more of your hard-earned cash.
Need expert guidance? My City Home Loans is here to help. Contact us today to explore mortgage options and learn how homeownership can work in your favor this tax season!