If you own a home do you know all the tax deductions and tax breaks that you might be entitled to? When you own your own home there are numerous tax breaks that you will want to be aware of so that you can reduce your end of the year tax bill. Here is a detailed look at the tax breaks you might qualify for.
When you own a home and pay a mortgage on it, the mortgage interest you pay during the year is one deduction you won’t want to miss. In order to claim the deduction you will need to itemize your tax return and fill out an IRS Schedule A Form. To find the amount you paid in mortgage interest you should receive a statement from your lender with a 1098 form to file with your tax return. Many mortgage companies will mail your form with your monthly statement.
If you take out a home equity loan or a line of credit against your home, the interest paid on these loans may also be tax-deductible or a portion may be tax deductible.
If your state or local government charges a real estate tax on your property based on your home’s value, the amount you pay is tax-deductible. It is important to note that you cannot deduct money you have paid into a mortgage escrow account until the tax bill has actually been paid.
If you own your own business and work from home you may be able to deduct part of your home costs as long as you have a dedicated room or rooms in your home that are exclusively used for business purposes. Deductible costs might include insurance premiums, a portion of the utilities, home repairs and more.
There are of course numerous home owner expenses that are not eligible for a tax deduction. Here is a list of some of the more common expenses that you will not be able to deduct (some of these may be deductible if you have an area in the home that is designated as a legitimate home office):
This post was published on May 28, 2013