If you’re still scrambling to find a few more deductions before you file your taxes, there are a few that are very close to home. In fact, they’re related to your home itself, and are often overlooked.
Interest paid on your mortgage can be deducted, up to a certain loan amount. The interest paid can be from loans taken out to purchase a home, or on loans that have been taken out in order to build or improve upon a home. Mortgage interest can be deducted for multiple properties.
Real Estate Taxes
Real estate taxes that were paid in a calendar year are deductible, too. This applies to all primary or secondary residences, or even undeveloped property. If you own rental properties, this amount is still deductible, but in a different category than a primary residence.
Improvements made to your home specifically for energy savings are deductible. This includes not only upgrades to more energy-efficient windows or doors, but also basic improvements like adding insulation to an older home.
In addition to the tax deduction from energy-saving home improvements, some energy-efficient products and major appliances may be eligible for tax credits. A deduction subtracts money from your total taxable income, while a credit reduces the amount of tax you owe. Tax credits may be issued for the installation of alternative energy equipment, such as solar panels, solar hot water heaters, or wind turbines. Many energy-star rated appliances may also be eligible for this credit.
In addition to home improvements related to alternative energy and energy efficiency, some other improvements are deductible in specific instances. For example, if changes are made to a home due to a medical condition, such as adding wheelchair ramps or installing medically necessary air filtration systems for severe asthma or allergies.
If you’ve joined the growing ranks of those working from home, you can deduct expenses related to maintaining a home office, if that’s where you meet clients or do most of your work. Costs that can be deducted include construction related to building the home office, utility costs related to the office (such as a dedicated phone line, Internet, or fax lines,) and the cost of office equipment you may need to do business.
A Final Word About Deductions
The options listed above are really only the tip of the iceberg as far as deductions go. This post is for informational purposes only and you should consult an accountant or other tax professional before claiming tax deductions and assistance with the specifics. Deductions are terrific, but only if you have all the paperwork to back them up; the right tax professional can save you lots of money and, more importantly, can save you from a potential audit down the road.
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