Tax Deductions Every Homeowner Should Know About
With the New Year kicking off, many people are beginning to think about tax season. If you've recently bought or are considering buying a new home at the Lake of the Ozarks, you may have some questions about what kind of tax benefits are available to you when you purchase a home. So, this week, we wanted to share with you some tax deductions that every homeowner should know about!
Mortgage Interest Deduction
Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $750,000 of debt incurred to purchase or substantially rehabilitate a home. While previously, homeowners were able to deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds, in 2018, home mortgage interest from home equity loans will no longer be deductible.
Property Tax Deduction
Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes. That deduction is effectively a transfer of federal funds to jurisdictions that impose a property tax (mostly local but also some state governments), allowing them to raise property tax revenue at a lower cost to their constituents.
Home Offices
Homeowners can deduct a portion of their utilities, home insurance, property taxes, mortgage interest, and home repairs as business expenses. Homeowners who work at home can even claim a tax break for depreciation on the business portion of their home. The business portion of the home must be used “regularly and exclusively” for business, and must be either a principal place of business; a place where the homeowner meets patients, clients or customers; or a separate unattached structure. The homeowner can even be an employee and qualify for the tax breaks.
Second Home/Vacation Home
Homeowners can deduct mortgage interest and property taxes from second homes and vacation homes as long as the properties are rented for 14 days or less per year. If any rental exceeds the 14-day limit per year, the IRS considers this as an income property. When such income property is sold, the seller will either have to pay the capital gains tax or conduct a tax-deferred exchange for other income-producing real estate of equal or greater value. For income property, mortgage interest, property taxes, and other expenses must be deducted against any income produced by the property. Vacation and second homes include condominiums, houses, apartments, mobile homes, boats, and similar property.
It's smart to think ahead about the potential tax deductions you can qualify for as a homeowner. It's also smart to work with a mortgage company at the Lake of the Ozarks who is willing and able to help you understand the homebuying process and getting the right mortgage for your specific needs. Let the expert mortgage lenders at MHQ - Mortgage HeadQuarters find out how much you can afford and get you into a mortgage program that's right for you! Call us today at 573-302-9990.
Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Mortgage Interest Deduction
Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $750,000 of debt incurred to purchase or substantially rehabilitate a home. While previously, homeowners were able to deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds, in 2018, home mortgage interest from home equity loans will no longer be deductible.
Property Tax Deduction
Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes. That deduction is effectively a transfer of federal funds to jurisdictions that impose a property tax (mostly local but also some state governments), allowing them to raise property tax revenue at a lower cost to their constituents.
Home Offices
Homeowners can deduct a portion of their utilities, home insurance, property taxes, mortgage interest, and home repairs as business expenses. Homeowners who work at home can even claim a tax break for depreciation on the business portion of their home. The business portion of the home must be used “regularly and exclusively” for business, and must be either a principal place of business; a place where the homeowner meets patients, clients or customers; or a separate unattached structure. The homeowner can even be an employee and qualify for the tax breaks.
Second Home/Vacation Home
Homeowners can deduct mortgage interest and property taxes from second homes and vacation homes as long as the properties are rented for 14 days or less per year. If any rental exceeds the 14-day limit per year, the IRS considers this as an income property. When such income property is sold, the seller will either have to pay the capital gains tax or conduct a tax-deferred exchange for other income-producing real estate of equal or greater value. For income property, mortgage interest, property taxes, and other expenses must be deducted against any income produced by the property. Vacation and second homes include condominiums, houses, apartments, mobile homes, boats, and similar property.It's smart to think ahead about the potential tax deductions you can qualify for as a homeowner. It's also smart to work with a mortgage company at the Lake of the Ozarks who is willing and able to help you understand the homebuying process and getting the right mortgage for your specific needs. Let the expert mortgage lenders at MHQ - Mortgage HeadQuarters find out how much you can afford and get you into a mortgage program that's right for you! Call us today at 573-302-9990.
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Comments
Post a Comment