A lot of the associated expenses that come with owning a house are eligible for tax deductions, and even planning ahead on how you’re going to pay a down payment or repair costs can reduce your overall tax bill.
What are some of the deductions that come with home ownership?
- Mortgage interest: If you’re paying down a mortgage on your primary home or even a second residence, you can get a deduction on the mortgage interest you pay. However, make sure that you are itemizing your deductions in order to take advantage of this tax break; any specific tax deduction that arise from Individual circumstances or events not related to income can only be tapped into if your taxes are filed correctly. Having a tax expert who can guide you through this process can really make a difference in making sure you optimize with specific deductions and even helping you decide whether you should itemize your deductions or follow the process to receive a usual standard deduction.
- Property taxes: The IRS has standard provisions and rules for deducting real estate taxes that you paid when you close the sale on your new home or that you pay in an escrow account throughout the year. These taxes are through state and local governments and can usually be a hefty charge. However, just like with mortgage interest, this is a deduction you take advantage of only when your tax return is itemized. You and your accountant will need to decide whether itemizing all of your tax deductions reduces your taxes more than a standard deduction otherwise would.
Every element of buying, owning, and repairing a house impacts your taxes. Whether you’re saving ahead of time through tax-advantaged accounts or you’re looking for the best way to lower your annual tax bill through potentially itemized deductions, knowing the details is incredibly important to making sure that you are tax obligations are fair to you. If you want to plan your taxes down to the last detail, contact Roberts Tax Advisory here.