According to studies, 64% of millennial homeowners have regrets about buying their house. This is usually due to the cost of maintenance and other hidden fees. Although being a homeowner is a huge responsibility, there are financial perks to buying a new home. Believe it or not, there are numerous tax incentives for homebuyers that can provide financial relief.
With that said, check out the list below to learn more about the most common tax deductions for homeowners.
1. Mortgage Interest Deduction
The mortgage interest deduction is one of the most popular tax breaks for homebuyers. It’s one that can save you a significant amount of money each year. The deduction allows you to deduct the interest you pay on your mortgage from your taxable income.
This deduction can save you hundreds or even thousands of dollars each year, depending on the size of your mortgage and the interest rate. If you’re a homeowner, be sure to take advantage of this valuable deduction.
2. Property Tax Deduction
One of the most important tax incentives for homebuyers is the property tax deduction. This deduction allows you to deduct the amount of property taxes you paid from your federal income tax bill.
Property tax deduction is available for both primary and secondary homes. It significantly reduces your tax liability. This deduction is just one of the many tax incentives that are available to homebuyers, and it can make a significant difference in your tax bill.
3. Home Office Deduction
As a homeowner, you may be able to take advantage of tax deductions for home office expenses. To qualify, you must use a dedicated space in your home exclusively for business purposes. This can include a separate room or a section of a room that is used only for work.
You’ll also need to keep records of your expenses, such as utilities, insurance, and repairs. If you meet the requirements, you may be able to deduct a portion of your mortgage interest, property taxes, and other home-related expenses on your tax return. This can help to reduce your overall tax liability and leave you with more money to reinvest in your business.
4. Energy Efficiency Deductions
Many homeowners are unaware that they may be eligible for energy efficiency deductions on their taxes. There are a number of improvements that can qualify, including energy-efficient windows, doors, and insulation.
In order to claim the deduction, homeowners must provide receipts indicating the cost of the improvements and how they were installed. Additionally, taxpayers must file Form 5695 with their tax return.
While the amount of the deduction may vary depending on the specific improvements made, it saves homeowners substantial money on their taxes. As such, it is well worth investigating whether energy efficiency deductions are available.
Understanding Tax Deductions for Homeowners
If you are a new homeowner, you may not be familiar with all the tax deductions for homeowners. Thankfully, Pacific Tax & Financial Group has you covered. We offer tax preparation and other services that can help you get the most out of your money.
If you’d like to speak with us, call 760-471-2040 or request an appointment online. We look forward to serving you!