Owning a home isn’t just an opportunity to build equity and personal wealth, it also provides several tax savings opportunities.
Homeownership may open the door to tax breaks that could reduce your taxable income.
If you’re looking to maximize the value of home ownership, consider these four tax deductions and be sure to discuss them with your tax professional.
Home Mortgage Interest
Mortgage payments not only include repayment of mortgage principal, but also interest payments, which can be tens of thousands of dollars over the life of a loan. If you itemize your tax return, you may be eligible to write off the mortgage interest you pay on your primary residence, helping you get back some of what you pay in interest.
Personal Property Taxes
Itemizing your tax return may allow you to write off your property taxes, which is a major plus if you live in an area with expensive real estate tax. But it’s not only your real estate tax—sometimes you can write off other taxes, too, including property taxes, state taxes, and local taxes.
Home Office Deduction
If you’re a freelancer or self-employed, don’t forget about the home office deduction. This deduction typically applies if you have a home office space used exclusively for business. You might also be eligible to deduct certain home expenses like a percentage of your utilities and Internet fees.
Energy Tax Credit
Have you made energy-efficient upgrades to your home? If so, you might qualify for an energy tax credit. Improving your home’s insulation, adding new windows and even installing energy-efficient HVAC systems or water heaters may help you qualify for tax credits.
Consult with a Tax Professional
It’s important to speak with a licensed tax professional regarding these potential tax credits. They can identify the right strategy to maximize your home’s tax benefits and put money back in your pocket.