Owning a home has its advantages
At the current time of year everyone is getting ready for tax season by collecting all of their necessary documents to either do their own taxes or ship everything off to their accountant. Last year there were some changes made to the tax code, but since then not much has changed. Here are some of the great benefits that you can take advantage of by being a homeowner. Consult with your account for more details and specifics on what is best and/or applies for you.
If you obtained your mortgage before December 15th of 2017 then you can deduct interest up to $1 million and if after, then only the first $750,000. Just note that mortgage interest is an itemized deduction so you should only take this if all of your itemized deductions will exceed the standard deduction. For married couples the deduction is $24,400, for individuals it is $12,200 and for head of households it is $18,350.
Private mortgage insurance
If you had put less than a 20% downpayment on your home when you bought it then you are most likely paying private mortgage insurance or “P.M.I.” You can take this deduction of the interest paid on this but just keep in mind that you only want to do so if your deductions exceed the standard deduction.
This is capped at $10,000 as a deduction for married couples who are filing jointly. Again, your deductions must add up to more than the standard deduction ($24,400 for a married couple) for this to be worth it.
Interest on a HELOC
If you have taken out a HELOC (home equity line of credit) for a home improvement project on your property then you can deduct the interest. The two requirements for this are that the loan must be for home improvements (not money taken out to buy a vehicle, pay for a big vacation, etc.) and the total amount of combined interest that can be deducted for your primary home loan and the HELOC is capped at $750,000.
If you work 100% from home then you can deduct $5 per foot of office space up to 300 square feet for a maximum deduction of $1,500. While there are rules in place for this like you cannot take this if you only occasionally work from home, it can be a great deduction.
Home improvements for “aging in place”
For those who are older, plan on staying in your home and need to make some physical accommodations to it then these can potentially be deductions. You need to have a doctor’s note affirming the necessary changes and the improvements will also need to exceed 7.5% of your adjusted gross income. These improvements would include things like widening doorways, adding wheelchair ramps, grab bars in bathrooms, etc.