Tax Savings!!!

With the 2015 tax season officially behind us, I want to talk about some deductions that could potentially save you, as a homeowner, thousands of dollars….

Let’s start with the obvious tax benefits of home-ownership, which is through your mortgage interest and property tax deductions. According to the National Association of Realtors, the average homeowner saves around $3,000 a year alone in those two areas.  On top of that, just this past December, Congress passed a bill that extended many exemptions that were on the brink of expiring and made others permanent.

A big exemption is mortgage insurance. Qualified homeowners can deduct payments on what we like to call PMI, for short, on their primary home. Sometimes you can deduct for a second property as long as it isn’t a rental. Another area of savings is in capital gains tax. If you sold your home in 2015 that may be an area where you could save, however I always recommend you talk to your CPA on exactly what you qualify for as there are different restrictions.

There are also some improvements a homeowner can make to their home that would allow for tax deductions. For example, medical improvements to your home to help meet medical needs. A good example of this would be a ramp to accommodate a wheelchair. You can deduct the amount by which the improvements exceed the increase in your home’s value. Another area where you can save is by making “green” improvements by taking advantage of an energy-efficiency tax credit. The break is 10% of the amount paid for green improvements, up to $500. Some examples of these improvements can be air-conditioning and heating units, storm doors, energy-efficient windows, you get the picture. 

The big thing is to start now. Don't miss out on documenting these potential tax savings so that this time next year you can be celebrating with a possible larger return.