Owning a home can provide some significant advantages when it’s time to file your federal tax return. From green energy credits to deductions for damage from natural disasters, there are a number of items homeowners may be able to claim that could reduce a tax bill.
Most homeowners know that they can deduct the interest paid on up to $1 million in mortgage debt for their primary home. The interest paid on up to $100,000 of a home equity loan for the same home may also be itemized.
There are several things relating to home ownership that you can’t deduct, unfortunately, including:
- Insurance premiums
- Homeowners association dues
- Depreciation of the home
- Local assessments
- Closing costs
- Repairs
- Wages paid for domestic help
- Utility expenses (gas, electricity, water, etc.)
- Down payments
The best way to get the most deductions on your taxes is to see a tax professional. However, there are also some great online tools that can file your federal and state taxes for you if you feel comfortable completing them on your own. In either case, it’s important to keep detailed records in all of the areas listed above to insure that you get the most tax deductions possible. Keep these deductions in mind this tax season and you could end up saving thousands of dollars on your next tax bill.
