If you’re a homeowner and you want to maximize your tax deductions, here are four areas that can help you do that:
Mortgage interest, mortgage points and property taxes. This is likely to be the biggest portion of your home-related tax deductions. You can deduct the interest on your mortgage on loans of up to $1,000,000 ($750,000 for new mortgages) as well as any mortgage points you paid on a new loan. As for property taxes, you can deduct up to $10,000 in combination with sales and/or income taxes.
Donations of household items. Whether it’s clothes, miscellaneous household items or large items such as furniture, you can deduct the “fair market value” of these donations on your tax return. Although there is no fixed method of determining what fair market value is, the IRS does have guidelines that can help you.
Certain home improvements. Although most home improvements don’t qualify, some energy-efficient improvements can be deducted. Many energy-efficient improvements or installations of renewable energy sources come with considerable tax credits, depending on the project. These projects may include the installation of solar water heaters, solar panels, geothermal heat pumps, and certain energy-efficient doors and windows.
Your home office. If, according to the IRS, you use your home “regularly and exclusively” for business, you can claim a portion of your home expenses—such as certain utilities and insurance—on your taxes. As a bonus, if you make repairs or renovations to your home office or to your entire home, you can claim a percentage of those costs on your tax return.
Keep in mind that these tips are not intended to be tax advice and you should consult a professional tax advisor about your particular tax situation.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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