While everyone hurries to finish up their taxes for the year Homeowners might be curious as to what type of benefits they could be looking forward to. This is the complete guide to all the tax benefits for filing this year (2017) as well as next (2018), provided by realtor.com:
Tax Break 1: Mortgage Interest
This is likely one of the biggest benefits to owning a home in 2017. Owners have the ability to deduct the interest on a mortgage of up to $1 million. And since the way mortgage payment are amortized, the first ones being almost all interest, the more recent your mortgage the larger your deduction. Next year only homeowners whose mortgage went into effect before December 15th, 2017 will be able to deduct up to $1 million, all other home owners will only be able to deduct up to $750,000.
Tax Break 2: Property Taxes
In 2017 your property taxes will be deductible in most instance. However, in 2018 property tax will no longer be a separate deduction. Instead owners will be able to take one deduction that will include property tax as well as state and local sales and income taxes that will be capped at $10,000 for those married filing jointly.
Tax Break 3: Private Mortgage Insurance
While the deduction had expired, the new tax bill retroactively made the deduction available for the 2017 tax year. If you make $100,000 and put down 5% on a $200,000 house, you'll pay about $1,500 in annual PMI premiums and thus cut your taxable income by $1,500. It should be noted that this deduction is only for itemizers and beginning next year when the standard deduction doubles very few tax payers will be itemizers so not many will be able to apply this deduction.
Tax Break 4: Energy-efficiency upgrades
Tax incentives for installing solar electric an solar water heating equipment are still available through December 31st, 2021.
Tax Break 5: A Home Office
If you work form home your office space and expenses can be deducted. You can take a $5 per square foot deduction for up to 300 sq. ft. of office space, which amounts to a maximum deduction of $1500. In 2018 this deduction will be eliminated for employee who choose to work from home but have an office to go to. However it will still be available for owners that are self-employed.
Tax Break 6: Home Improvements to Age in Place
Home improvements that allow elderly to stay in their homes as they age, such as wheelchair ramps and bathroom grab bars, can be deducted. Owners will need a letter from their doctor to prove these changes were medically necessary. Furthermore, in 2017 these home improvements will need to exceed 7.5% of your adjusted gross income. So if a owner makes $60,000 the deduction won't kick in until the improvements cost more than $4,500.
Tax Break 7: Interest on a Home Equity Line of Credit
If a home owner took out a home equity line of credit, or HELOC, in 2017 or earlier, the interest paid on that loan is also deductible. In 2018, the new tax law eliminates this tax deduction unless the HELOC is used specifically to buy, build, or improve a property.
Article information provided by: realtor.com