April 15 marks one of the most dreaded days of the year – tax day. We completely understand why so many individuals experience anxiety about having to get their taxes done. It can be a time-consuming hassle to compile all of the necessary information, and it is even more painful when you end up owing money to the IRS. However, homeownership can come with its perks in this department. Following are a few popular real estate tax breaks that too many homeowners often forget they can include in their yearly taxes.
1. Tax breaks for energy-efficient home upgrades
Maybe you installed new windows throughout your home to save money on your heating and cooling bills, or maybe you installed solar panels to help reduce your monthly power expenses. While energy-efficient upgrades like these can help save you money over the years, these types of home improvements can also qualify you to receive state and local tax breaks. A few of the projects that are considered energy-efficient upgrades include tankless hot water heaters, insulation, dual-paned windows, solar panels, doors and roofs.
2. Mortgage interest deduction
One of the most popular tax breaks for homeowners is the mortgage interest deduction. In fact, this write-off is often the deciding factor on why some individuals go from renting a property to owning a home. Individuals in the United States are able to deduct interest on up to $1 million in mortgage loans. In fact, even if you take out a home equity loan or purchase a second home, this amount is put towards your $1 million limit. Regardless of how many mortgage loans you have, you can still deduct all of the interest until you accrue over $1 million in loans.
3. Private mortgage insurance deduction
If you did not have the funds available to make a 20% down payment on your home, then your lender likely required you to have private mortgage insurance (PMI), which appears as an extra expense on your monthly mortgage bill. Fortunately, this amount can be used as a tax write off, as long as your income is less than $100,000.
Knowing the ins and outs of real estate tax deductions can be confusing and overwhelming, so it is always advised to consult a professional to take full advantage of your opportunities.
As Charlotte’s premier real estate firm, Henderson Properties is dedicated to sharing timely and accurate information with everyone that we work with.