Tax season is here, and if you're a homeowner in Central Texas, it’s the perfect time to explore how to maximize your deductions before the April 15th deadline. Owning a home not only provides a place to call your own but can also open doors to valuable tax breaks.
Let’s dive into the top tax tips for homeowners that could help you save money this filing season.
Mortgage Interest Deduction
One of the most significant tax benefits for homeowners is the ability to deduct mortgage interest. If you have a mortgage of up to $750,000 (for loans taken out after December 15, 2017), you can deduct the interest paid on your primary or secondary home. Make sure to have Form 1098 from your lender, which details the interest paid over the year.
Property Tax Deductions
In Texas, property taxes can be substantial, but they’re also deductible. Currently, the state and local tax (SALT) deduction is capped at $10,000, which includes property taxes. If you’ve paid your property taxes early or if you prepaid for the upcoming year, you might maximize this deduction.
Home Office Deduction
If you work from home and use a dedicated space exclusively for business purposes, you may qualify for a home office deduction. This applies to both homeowners and renters. Be sure to keep detailed records and calculate the square footage accurately.
Energy-Efficient Improvements
If you’ve made energy-efficient upgrades to your home, such as solar panels, energy-efficient windows, or insulation, you may qualify for federal tax credits. The Inflation Reduction Act has extended and expanded these credits, making them more valuable.
Points Paid on Mortgage
If you paid points to secure a lower interest rate on your mortgage when you purchased or refinanced, those points may be deductible. Typically, these points must be deducted over the life of the loan unless you met specific conditions at the time of purchase.
Capital Gains Exclusion
While not a deduction, it’s important to note the capital gains exclusion when selling a primary residence. If you’ve lived in your home for at least two of the past five years, you can exclude up to $250,000 ($500,000 for married couples) of profit from taxes.
Before claiming any deductions, consult with a tax professional to ensure you qualify and comply with current IRS guidelines. By taking advantage of these potential deductions, homeowners can lessen their tax burden while maximizing the financial benefits of homeownership. If you have any questions about homeownership or if you're considering buying or selling a home in Central Texas, feel free to reach out — I'm here to help!
Posted by Shane White on
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