3 Tax Deductions Homeowners Should Consider to maximize Their Tax Savings
March 15, 2023You can claim tax deductions for homeowners to maximize your tax savings. Here are 3 main tax deductions you should claim if you qualify.
Tax season is just around the corner, and there is still time for you to maximize your tax savings. You can do this by identifying tax deductions you qualify for as a homeowner, and get relevant documents to support your tax deduction claims. However, it is not that easy to determine and calculate the amount of tax deductions or credits you can qualify for. To help you learn the tricks to maximize your tax savings, here are 3 tax deductions you need to know more about.
1/ Mortgage interest
Many people in the US don’t know that within certain limits, they can deduct their mortgage interest. However, this is the one of the most significant tax deductions for homeowners. For instance, if you had your mortgage before 15th December, 2017, you are eligible to deduct interest payments up to $1milion you used for home acquisition. However, these terms have changed and a married couple filing jointly are limited to a debt of $750,000 and if they file separately, they can claim up to $750,000 each.
2/ Home office deductions
This tax deduction is abused by many people, but if you qualify for it, you should not be afraid to claim it. You qualify for this tax deduction if you use part of your home exclusively to run a business. However, you must document how you use the part of your home and all expenses involved. It is not easy to get this tax deduction, mostly, if your business barely brings in money, and your home is not that huge. Apply for this deduction if you have a huge home, you have dedicated half of it to your business and the business is bringing in good money.
3/ Home energy tax credit
If you do good to the environment, the IRS is ready to reward you with a tax break. You just need to upgrade your home by making energy-efficient improvements. This will not only help you save on your monthly bills, but also pay less tax bill come tax season. You can qualify for Non-Business Energy Property Credit by installing energy efficient devices such as water heaters, solar panels, qualified oil furnaces, qualified insulation for heat loss and gains, and more. This energy tax credit allows you to get 10% credit for your energy efficient upgrades.
If you install an alternative energy equipment, you can qualify for a bigger energy tax credit – Residential Energy Efficient Property Credit. Some of the equipment included here are solar electric property, geothermal heat pump property, wind energy property, solar water heating equipment, and fuel cell property. The two energy tax credits can help you maximize your tax savings.
Final Words
As a homeowner, you need to maximize on your tax savings by claiming all tax deduction and credits you qualify for. You need to consider mortgage interests, home office deductions and energy tax deductions for homeowners. You don’t have to do any calculations here, just use H&R Block to know if you qualify for these tax deductions and credits. Then provide requested information, and the online tax program will file tax returns for you. Note all the tax deductions and credits you qualify for will be included in the tax return, to make sure you pay less tax.
