As a homeowner, are you taking advantage of the numerous tax benefits that come with owning a home?

Many benefits of owning a home

It's important to be aware of the tax benefits of homeownership. Purchasing a home can be a significant investment but taking advantage of available tax deductions and credits can help offset the cost.

Here are seven deductions and credits you should not overlook:

1. Mortgage interest deduction: You can deduct the interest you pay on up to $750,000 in mortgage debt as an individual or married couple, or up to $375,000 for married couples filing separately. If you purchased your home before December 15, 2017, the deduction limit is higher.

2. Mortgage points deduction: If you paid points upfront to lower your mortgage rate, you can include this amount with your interest tax deduction.

3. State and local tax (SALT) deduction: You can deduct up to $10,000 ($5,000 if married filing separately) of state and local property taxes in the year you pay them. You can also deduct any state and local income taxes or sales tax paid in the current year.

4. Home office deduction: If you use a space in your home exclusively for business, you may be eligible for a home office deduction. There are two methods to calculating your deduction.

5. Residential energy credit: You can deduct up to 30% of the cost of new energy-saving systems that use solar, wind, geothermal, biomass, or fuel cell power to heat water, generate electricity, or heat your home.

6. Electric vehicle charging station credit: If you own an electric vehicle, you may be eligible for a tax credit of up to 30% of the cost of charging equipment, to a maximum of $1,000.

7. Deduction for medically necessary home improvements: If you experience a medical condition that requires you to modify your home or install special equipment, you may qualify for a deduction.

At Ascendant 360 Wealth Advisors, we understand the importance of tax planning in maximizing your wealth. We can help you navigate a wide range of financial and tax planning challenges. To learn more about how we can help you with your tax planning strategy, schedule a call with us.

Footnotes:

1. https://www.irs.gov/publications/p936

2. https://www.irs.gov/taxtopics/tc504

3. https://www.irs.gov/taxtopics/tc503

4. https://www.irs.gov/newsroom/home-office-deduction-benefits-small-business-owners

5. https://www.irs.gov/forms-pubs/about-form-5695

6. https://www.kiplinger.com/taxes/605201/federal-tax-credit-for-electric-vehicle-chargers

7. https://www.nolo.com/legal-encyclopedia/deducting-medical-home-improvements.html
   

The commentary provided here is solely for general information purposes and should not be interpreted as legal, tax, or investment advice, nor does it establish an attorney-client relationship. It's important to note that past market performance is not a guarantee of future results. While the information presented has been gathered from reliable sources, it is not guaranteed.