Today I’ll discuss seven tax benefits you can get from owning a home.
Today let’s discuss the seven tax benefits of owning a home.
1. Mortgage interest. The newer your loan, the more interest you’re paying on that loan, therefore, the more you have to deduct. With the new tax plan that went into effect late last year, anyone who had mortgages taken out after December 15, 2017, will need to remember that there will be different tax implications for 2017 versus 2018. If you check with your CPA, they will be able to give you all the details you need.
2. Property taxes. As of this year, property tax is no longer going to be a separate deduction. There is also a deduction cap at $10,000 for those who are married and filing jointly.
3. Private mortgage insurance (PMI). Odds are that if you didn’t put 20% down on your home, you’re probably paying private mortgage insurance. It ranges from about 0.3% to 1.15% of the actual home loan. There are allowed deductions for 2017, however, in 2018, those will only be for those who itemize. Additionally, the 2018 tax law nearly doubles the standard deduction.
4. Energy-efficient upgrades. You can receive tax credits for installing energy-efficient upgrades in a home. Most expired in 2016, but you can still get credits for solar electric and solar water heating equipment. Upgrades installed between Jan. 1, 2017, and Dec. 31, 2019, 30% of the expenditures are eligible for the credit. That goes down to 26% for installation between Jan. 1 and Dec. 31, 2020, and then to 22% for equipment put in between Jan. 1 and Dec. 31, 2021.
“Renovations for older homeowners such as wheelchair ramps or grab bars are tax deductible.”
5. A home office. If you work from home and use an office there, you can deduct expenses toward that space. There are strict rules on what constitutes a dedicated, fully deductible home office space; for more details on that, click here.
6. Home improvements to age in place. Renovations for older homeowners such as wheelchair ramps or grab bars are tax deductible. The caveat here is that you’ll need a letter from your doctor proving that these renovations are medically necessary.
7. Interest on a home equity line of credit (HELOC). These loans are used for many things like college, weddings, or home improvements, and the interest on them was deductible. The new tax law will do away with this deduction, unless that HELOC is used specifically to “buy, build, or improve a property,” according to the IRS.
For more details on each of these, click here. If you have any questions about this topic or have an idea for another topic you’d like to see covered, feel free to reach out to me. I’d be happy to help answer any questions you have.