Homeowner Tax Benefits

If you’re a homeowner or planning to become one soon, you may be eligible for certain special tax benefits. Here’s a list of credits and deductions to help you reduce your tax liability as much as possible. Keep in mind that to claim these benefits you’ll need to itemize your deductions.

Mortgage Interest Deduction

Mortgage interest often accounts for a substantial portion of home ownership costs. This deduction allows you to deduct the mortgage interest you paid throughout the year. You can deduct up to $750,000 (or $375,000 if married and filing separately).

Property Taxes

In most regions, homeowners must pay property taxes to the local government. If you’re required to pay these taxes, you can deduct them from your annual tax bill. This way you won’t pay double.

Home Office Deduction

If you’re self-employed and use part of your home exclusively or primarily for business purposes, you may qualify for the home office tax deduction. This benefit allows you to subtract a portion of your mortgage, insurance and utility costs from your taxable income. To be eligible, you must use this space regularly for business activities, such as meeting clients or conducting business operations.

Home Energy Tax Credits

The government encourages eco-friendly initiatives by offering renewable energy tax credits. Home improvements such as installing a solar energy system or upgrading to energy-efficient heating and cooling systems could qualify you for these deductions. If you’re interested in improving your home, consider using a HELOC to get started.

Medical Home Improvements

If you undertake medically necessary home improvements, such as installing medical equipment for a bed-bound individual or making your home wheelchair accessible, you may be able to deduct those expenses on your tax return. To qualify, the improvements must benefit you, your spouse or dependents residing with you full-time.

Capital Gains Exclusion

When you sell your home, you must consider potential capital gains, representing the increase in your home’s value over time. Fortunately, if you’ve owned the home for at least two of the last five years, you can exclude up to $250,00 (or $500,000 if married filing jointly) of the capital gains from your taxes, significantly reducing your tax liability.

Get Help With Your Taxes

We know taxes are confusing. That’s why we offer up to 10% off on TurboTax® federal products for members with online banking accounts. TurboTax® helps you accurately and efficiently calculate your taxes to take the stress out of filing. Get your special TurboTax® offer today by logging into online banking and clicking on My TurboTax® in the menu bar.

Read more articles like this on HZCU’s Financial Knowledge Hub.

At Horizon we’re great at banking, but we’re not tax professionals! If you have questions about your specific tax situation, make sure to consult a tax expert. You can also learn more on the IRS website.