If you’ve owned a home for a few years, then you’ve probably taken advantage of the interest deduction that lowers your tax bill. However, several other home-related expenses can also reduce the amount you owe in taxes. For instance, you may be able to deduct home office operating costs, major renovation expenses and the interest charged for home equity loans. Here are a handful of items to keep in mind and review with your accountant.
You can deduct the cost of maintaining a home office from the amount that you owe for taxes. Even if you freelance, you can deduct these expenses.
If you’ve borrowed funds to complete a major renovation on your home, the interest that you accrue on the loan may be tax deductible. In addition, home renovations that you need to make to accommodate a person who is disabled or chronically ill are tax deductible.
Renewable Energy Upgrades
To encourage the use of renewable energy systems, a substantial tax credit is available if you have one installed. Tax credits work differently than deductions because they lower your actual tax bill.
Home Equity Loans
With the housing market beginning to bounce back, home equity loans and credit lines are reappearing. Married filers can deduct the interest on home equity loans that total $100,000 or less while single filers can deduct the interest on loans of $50,000 or less.
Disaster or Theft Losses
If you’ve suffered financial losses due to theft or a disaster, you can deduct them from your tax bill. Keep in mind that you can only decrease your taxes by the amount that your insurance company will not cover.
Tax breaks and credits make homeownership more affordable. Be sure to review the available deductions to take full advantage of owning a home.