Property taxes
The days are quickly passing until April 15, otherwise known as the day when tax returns are due to the IRS. If you haven't done so already, now is the perfect time to start gathering the necessary paperwork and information to file your taxes.
The longer you wait to file closer to the deadline, the more stress you'll put yourself under. In those moments of haste, you increase the chances of forgetting where certain documents are, or you may even pass up potential tax breaks that can have a big impact on your returns.
Passing up tax breaks is something every homeowner should avoid. Owning a home isn't simply about owning property and having a place where your family can grow. The government offers many tax breaks that make some yearly expenses a bit easier to handle.
With that in mind, here are some tax breaks you can take advantage of that you may not be familiar with.
Deduct mortgage interest
No one enjoys actually having to pay taxes, but it's required by state and local governments if you own a house. The amount you owe typically depends on where you live and how much property is under your name.
According to Realtor.com, you can therefore have local and state property taxes as itemized deductions. It's also important to keep in mind when you paid those taxes because the amount of the deduction depends on the date.
Essentially if you pay your property taxes earlier, you will likely see positive results on your return.
Extra room benefits
Interest is everywhere, and unless you had enough cash to buy your upfront, you likely took out a mortgage. On top of the amount you owe, you also owe money to the lender for the right to borrow money. Luckily, you can deduct these interest payments up to $1 million.
This is another itemized deduction that can result in substantial tax savings. For instance, if you're in the 25 percent tax bracket, you can save deduct $10,000 of mortgage interest and save yourself $2,500.
Energy efficiency
An extra, unused room in your house can also be beneficial in two ways. First, if you turn it into a dedicated home office where you work from a majority of the time, you can claim the home office deduction. The IRS even lets you
deduct lighting, utility and Internet expenses with certain limits.
If you live in a city that is visited by tourists, you can claim a deduction from renting your home on occasion. Keep in mind, however, that this income is only tax free if the rental was 14 days or less throughout the entire year.
Ensure your taxes are correct
The IRS will provide tax deductions if you actively invest in your home to make it more energy efficient. Whether you install solar panels or window panels, you will find that benefits for energy efficiency exist.
You can claim up to 10 percent of the amount paid up for up to $500.
Since the IRS has quite a few tax deductions for homeowners, you'll benefit by starting starting the tax filing process well before the April 15th deadline.
Consider using a trusted tax software, or if you prefer meeting in-person, head to a qualified tax advisor.
Filing taxes is never a fun process, but there is no reason as to why you shouldn't claim certain deductions that are tailor-made for homeowners. You'll be glad you made the decision to buy a home.
