For many people in the US, tax season often brings a sense of dread, however if you’re a homeowner it can be an exciting prospect to receive a refund. From deductions to credits, understanding these financial incentives can mean more money refunded—or less owed! Here are a few tips and tricks that US homeowners can use to maximize their tax refunds:
The mortgage interest deduction
One of the most common tax deductions for homeowners is the mortgage interest deduction. This deduction allows you to deduct the interest you pay on your mortgage from your taxable income. In order to qualify, you must itemize your deductions on your tax return and your mortgage must be for your primary residence.
The property tax deduction
Another common deduction for homeowners is the property tax deduction. This deduction allows you to deduct the amount of property taxes you paid during the year from your taxable income. Similar to the mortgage interest deduction, in order to qualify you must itemize your deductions on your tax return and your property taxes must be paid to a local or state government entity.
The home office deduction
If you have a dedicated home office space, you may be able to take the home office deduction. This deduction allows you to write off a portion of your mortgage interest, property taxes, insurance, utilities, and other expenses related to your home office from your taxable income. In order to qualify, you must use your home office exclusively for business purposes and have a specific space for it in your home.
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The capital gains exclusion
When you sell your home, you may be able to exclude a portion of the capital gain from taxation. The capital gain is the difference between the sales price of your home and its original purchase price. To qualify for the exclusion, you must have owned and lived in your home for at least two years prior to its sale.
Energy-efficient home improvements
If you made any energy-efficient improvements to your home during the year, you may be eligible for a tax credit. These include things like adding insulation, installing energy-efficient windows, and upgrading energy-efficient appliances. The amount of credit depends on the type and cost of the improvement.
Tax refunds are never a guarantee, however by following these 5 tax tips you can increase your chances of receiving a higher refund. Every little bit helps when it comes to saving money so it’s also important to speak with a knowledgeable accountant or tax consultant about your situation in order to get the most out of your refund.
