5 Tax Benefits that you should claim when you are HOMEOWNER?
Paying taxes is usually a cumbersome process for taxpayers. The simple reason being, the numerous clauses and conditions that one has to keep in mind. However, these variations at times come to your rescue as well.
If you are a taxpayer who is also a homeowner, there are more than a few ways by which you can save taxes. The following is a list of some tax benefits that you can avail. The combination of deductions and credits will help you save considerably.
Home Improvement Loan
Should you decide to take a loan to improve or enhance your home, there are tax benefits associated with it. Here are a few things that you should be aware of.
- Interest on home loan improvement loan is completely deductible up to $100,000.
- Any interest paid on HELOC or home equity line of credit is also eligible for tax credit.
- People who own a second home, the mortgage is deductible if you have spent at least 14 days or about 10% of rental days in the home.
According to a Congressional Research Service, homeowners in America claimed more than $173 Billion in the year 2001. The amount was close to $30 Billion in 2015 and expectations are the number will go up. Here are some important pointers regarding property tax.
- The taxes that you pay for your properties are almost always deductible.
- About 54% of Americans who own a house use this deduction.
- Clergy and military service members can write off home mortgage interest and estate taxes despite receiving housing allowances.
- You cannot take off any of the following expenses or charges.
- Appraisal fees
- Attorney fees
- Transfer taxes
- Cost for a credit report
Renewable Energy Credit
With a wider range of equipment and devices available, you have more options to install renewable energy-based equipment. Here is how you can benefit from it.
- Installing any renewable energy-based equipment makes you eligible for Renewable Energy Efficiency Property Credit.
- You can claim as much as a staggering 30% of the total equipment cost and even installation charges through the credit.
- According to the Solar Energy Industries Association, more than 700,000 homemakers have installed equipment since 2010.
In certain rare cases in the USA, you can own a house but the land might still belong to the original owner. In such cases, you would rent the ground from the owner so as to use your property on the ground. The IRS understands this and offers the following.
- You can deduce the “ground rent” from your tax filing.
- You should be paying rent to the ground owner either monthly or annually.
- And the lease should be at least for 15 years for you to avail this deduction.
- But, if you wish to capitalize on the ground rent and make payments so as to buy the lessor’s interests, this clause is not applicable.
If you are aware of the concept of a reverse mortgage, the IRS has something interesting that might catch your attention. Here is all that you need to know.
- The IRS does not consider reverse mortgages as income, rather loan advance.
- The amount that you receive as the reverse mortgage is non-taxable.
- The interest that is accrued on a reverse mortgage is taxable unless the loan amount is completely paid.
- Unlike a traditional mortgage, where you can claim interest paid for each year, the same is not applicable in a reverse mortgage.
In the year 2016, as many as 150,272,157 taxpayers filed returns out of which 131,618,295 are estimated to have done them electronically. If you are one of them, the above should help you lower the taxes.