April is here which means it’s tax season! As a homeowner, there are more factors to consider and more tax breaks to take advantage of. You don’t want to miss out on any of these deductions or end up paying more taxes than you have to. Follow these homeowner tax tips when you file your taxes this year.
Deduct Property Taxes
You can deduct any property taxes that you pay on your federal tax return. Keep all this paperwork handy, and make sure you deduct the right amount of taxes for your tax year. Some property tax authorities work a year behind, (ie: you paid 2013 taxes in 2014) but that doesn’t matter. File a return for whatever you paid this tax year. .
Deduct Private Mortgage Insurance
If you paid less than 20% on your down payment, then you’ll need to pay private mortgage insurance. These costs are also deductible on your tax return, but should not be confused with homeowner’s insurance.
Don’t Deduct Homeowner’s Insurance
Unfortunately, you can’t deduct homeowner’s insurance costs. Many people get this confused with private mortgage insurance and end up in trouble with the IRS. The only exception to this rule is if you own a second rental property. Then, you can deduct homeowner’s insurance on this other property, but you can not deduct homeowner’s insurance on your private residence.
Energy Tax Credit
If you made improvements on your home last year that contributed to decreased energy use , you can claim an energy tax credit. Did you buy new Energy Star appliances, fix up your roof, or replace your windows? These costs can all be deducted from your federal income taxes. Keep track of any repairs and store all your receipts. Check the Energy Star website to determine how much you can deduct.
Mortgage Interest Deduction
You can also deduct all the money you pay for interest on your mortgage. Since you can deduct any payments you make during the tax year, some people choose to pay their January payment in December to help increase this deduction.
Owning a home can help increase your tax return. Keep track of all your home expenses and repair costs so that you can claim these on your taxes at the end of the year. You may need the help of a tax professional to make sure you receive as much back on your taxes as possible.