It’s the most wonderful time of the year, said no one about tax season.
That can change this upcoming April 15 – especially if you recently purchased a home, or are in the process of doing so.
With some changes to the tax code, fewer Americans will need to itemize their filings due to changes to standard deductions.
Here, we break down some of the top tax write-offs* you should be aware of entering the new year, including some changes.
Did you know homeowners can deduct mortgage interest on their taxes?
While the IRS places monetary limits on the total amount of debt, interest paid through the year is deductible for mortgages up to $1 million. The loan must have been taken out prior to Dec. 14, 2017.
You will want to watch for the 1098 tax form to utilize this incentive.
Anyone who works from home knows of all the perks – but it can also pay off on your 2018 return.
Restrictions on this deduction have tightened, and are limited to self-employed workers. You may also be required to use the office space in your home exclusively to conduct business, otherwise, it may not qualify for this tax perk.
Equity Credit Interest
If you paid interest on a home equity loan or line of credit, it could qualify for a deduction this tax season. The monetary limits are similar to those that govern mortgage interest.
Keep in mind that if you used your equity toward personal property, like paying for a car, it may not be used for a deduction. However, home improvements, such as a remodel, certainly do qualify.
If you are earning income by renting out a home, you can reduce your taxable income dollar for dollar through home repairs/improvements.
The amount spent on these upgrades can be deducted from taxable income, possibly easing your tax burden.
There are some changes to the amount of state and local property taxes homeowners can deduct on their federal taxes.
For 2018, the total property tax deduction is cut off at $10,000.
It pays to own a home, and you can take full advantage of it come tax season.
*Premier Mortgage Resources does not provide tax, legal or accounting advice. This material has been prepared for educational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Individuals should consult with licensed tax, legal and accounting advisors before engaging in real estate transactions.