Fri. Jul 19th, 2024

Maximizing Your Refund —2023 Tax Strategies for Homeowners

The tax season is approaching. As usual, homeowners are looking for tax breaks to maximize their savings. Luckily, there are various advantages for homeowners. You can potentially deduct up to several thousand dollars in tax breaks. Owning a home can give you various tax advantages, but you must know what they are to redeem the benefits. 

Tax preparation & filing can be a difficult process. While it may be simple with a single W-2, itemized deductions can be complex– especially for homeowners. It takes time. However, the effort is worth it. To make the process easier, hire an expert for tax preparation in San Jose today. 

Tax breaks for homeowners

  • Mortgage points deduction. 

When you purchase a home using a loan, you must pay some fees to the lender, called mortgage points. Each point represents a percentage of the mortgage amount. For example, one percent of a $400,000 mortgage would cost you $4,000. You can deduct taxes for the amount you paid in the same year you bought the house. However, exceptions may exist. 

  • Property taxes. 

You are eligible for property tax deductions if you pay taxes on an owned property. When filing separately in marriage, you can deduct up to $5,000 in taxes. The same applies if you file while being single. When you file jointly with your spouse, the limit increases to $10,000. 

  • Necessary home improvements. 

If you have spent money on necessary home improvements, those can qualify for tax deductions. However, it is important to underst& the definition & meaning of necessary here. For example, you cannot request a deduction for renovating your fully functioning kitchen. However, those costs may qualify if you make permanent changes in your home for medical reasons. For example, building a wheelchair-friendly path. 

  • Home-office expense deduction. 

If you work from home & do not have an office outside your home, the room you use can qualify for a home-office expense deduction. The room can be your garage, barn, or studio; it does not matter. However, it must be exclusively a part of your house & regularly used as a place for business. 

  • Mortgage insurance. 

Private mortgage insurance or a PMI protects your lender if something happens to you & you can no longer pay. You can deduct the taxes on those payments if you have mortgage insurance. 

Whether it is your first or tenth year of paying taxes, you should not do this alone. Hire a tax preparer or a financial counsel today.