It’s tax season, but that doesn’t have to bring bad news for homeowners. By owning a home, you are able to itemize certain deductions and get the biggest return possible.
Before submitting your taxes this year, make sure you are taking advantage of these tax breaks for homeowners.
No matter how much interest you pay on your home loan, make sure you report the total amount so that you can get a deduction on your taxes. This is generally the largest deduction that homeowners can make. If you own a second home — provided it is not a rental property — you can also deduct your mortgage on that property as well.
Use form 1098, your Mortgage Interest Statement, to file for this deduction.
If you purchased a home this year and paid the insurance company points in order to lower your rate, you can deduct this cost on your taxes this year (but not any year going forward). You can also deduct points if you have refinanced your loan this year.
The property taxes that you pay to your state are also deductible. Remember that this refund comes from the state, not the federal government, and you usually have to file it separately from your taxes.
Home Repairs Not Covered By Insurance
If you suffered property damage to your home but had to pay the amount for the repairs because your homeowners insurance did not cover it, you may be eligible for this deduction. The catch: the amount you paid for repairs must equal 10% or more of your total adjusted gross income for the year.
Energy Efficiency and Renewable Energy Credits
If you made improvements to your home that improve energy efficiency or added devices that use renewable energy (i.e. solar or wind), you may be able to receive a tax credit from the IRS.
Improvements to your home that count as energy efficient include:
- Storm doors
- Energy-efficient window replacement
- Insulation and Ventilation
- Asphalt or metal roofing
Interest on Home Improvement Loans
While you can’t deduct the cost for materials or labor when it comes to home improvement project, you can deduct the interest you paid on any loans that you took out to pay for the improvements.
We hope you get a big return this year. And remember, if you want to start your home improvement project this year, any interest you pay on the loan will be deductible next year! To get a free quote on your home exteriors project, contact Schmidt Roofing today.