Purchasing a home for the first time is one of the biggest milestones one can have in life, and it is a liberating yet stressful experience. Many buyers will spend months researching home after home, attending open houses, visiting and revisiting homes they prefer, and spending countless hours communicating with their agent to make sure they get everything just right. Many times the buyer gets so caught up in the process of buying a home that they miss out educating themselves on many of the tax benefits that come with actually owning the home. On the other hand, there are owners who have been owning for some time, and they may have made some upgrades in the past year to improve their home. Regardless of when you purchased your home, there is a tax break you can take advantage of. Get the most out of your tax return in 2017 by writing off any of these four things.
Energy Efficiency
Americans have been growing more conscious of our energy consumption in recent years, and many cities are in the middle of a transition to using more renewable energy. While this initiative is popular on a large scale, there are also many people who are going the same route in their homes. One of the most common upgrades around the country comes in the form of energy efficiency. If you made an upgrade in 2016 to incorporate renewable energy resources (solar electric systems, solar water heaters, fuel cells, turbines, or geothermal heat pumps) into your home, you can get a 30% credit thanks to the Renewable Energy Efficiency Property Credit.
Forever Home Improvements
So you are in your forever home, but you find that your age is catching up to you. Maybe you installed a wheelchair ramp to the front of your house or you added a lift to the staircase to make it easier to get upstairs. These upgrades are what’s known as “age in place” upgrades, and you are entitled to a tax credit for making these renovations in 2016. This credit is designed to help increase the safety of your home along with allowing you to live there longer independently. You can read the specifics of the tax credit by reviewing the Senior Accessible Housing Act.
Property Taxes
For the most part, you can always deduct your property taxes. You usually pay these taxes monthly in your mortgage, but there is also an option to pay them up front. The deduction must be claimed that same year, but it is a good way to avoid a huge tax bill at year’s end. Since your taxes are built into your mortgage, you may just pay it and not actually know what portion goes to this tax. Check out this tool to find out exactly what your property taxes are each month.
Mortgage Interest
If you do not deduct anything else from this list, you should at least be deducting your mortgage interest. It is the most important tax break to homeowners across the country. It is especially important to new owners as the tax break takes into account how old your mortgage is and you get a better savings if you have a newer mortgage.
Owning a home is a lot of work, but it is also extremely rewarding. If you are on the fence about buying a home, make sure you explore other benefits of buying vs renting to help make your decision.
