Tax season is never fun, and having a home can add a little extra complexity to your taxes. Homeowners often have to pay a little more due to property taxes, but many are surprised to learn that having a home can also save money. There are many tax credits and deductions you should take advantage of if you want to save money. These tips and tricks can help you navigate tax season as a property owner.
1. Itemize Your Deductions
It’s tempting to just take the standard deduction and avoid having to focus on all the little details, but there are several types of expenses you’re only allowed to write off if you’re willing to itemize. Homeowners are allowed to claim both state and local property taxes as a deduction, and they also get to deduct the interest on their mortgages. Another big deduction you can write off if you’re willing to itemize is any sudden, unexpected, and unusual type of damage, such as a natural disaster or vandalism.
2. Save All Your Home Improvement and Renovation Receipts
This tip may not help you immediately, but it could result in big savings eventually. If you sell your house at a profit, you may have to pay income tax on those funds one day. However, you can take into account any sort of repair or improvement, including things such as new counters and landscaping. These costs can eventually be added to the purchase price of your house, reducing the amount of taxable profit you have to report.
3. Keep All Your Records Organized
Keep a file box large enough to hold all important papers and sort them into appropriate categories. Typically, the IRS doesn’t require documents more than six years old, so you only need to hold on to newer items. Of course, this is extremely handy in case you get audited, but even those who aren’t audited may find it helpful to stay organized.
4. See if You Qualify for Energy Tax Credits
To encourage more sustainable energy usage, the government offers tax credits for those who have certain types of energy-efficient homes. Typically, these credits let you write off somewhere between 10 and 30 percent of the cost for things such as energy-efficient windows, air conditioners, furnaces, heaters, and solar-powered generators. Energy-efficient upgrades also increase the appeal of your home for people who are looking at homes for sale in Irvine, California.
5. Write Off Your Home Office
If you’re lucky enough to work from home, you can deduct expenses for the space you use for your work. Homeowners who have work spaces in their homes can deduct the square footage of these spaces from their taxes. However, not everyone is able to qualify for this. The space has to be somewhere you regularly and exclusively use for your business.
If you’re a homeowner and aren’t comfortable doing your own taxes, you know to go to a reliable accountant or other tax professional for help. In the same way, if you’re looking to buy or sell a home, you should find a real estate agent in Irvine who has experience and operates with the highest level of professionalism. For reliable real estate advice and impeccable service, reach out to the experts at Irvine Residential Living. Call one of our friendly agents today at 714-454-6304.