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A Guide to Tax-Time Breaks for Homeowners

A Guide to Tax-Time Breaks for Homeowners

OK, homeowners, tax season is here and you’ve got just over a month to take advantage of this year’s tax breaks. If you’re feeling a little in the dark about what you may qualify for and you’re ready to throw your hands up in frustration, instead, take a deep breath and read on. There are various deductions, credits and exclusions that homeowners may qualify for and it’s time you take advantage of what Uncle Sam is offering.

Here are a few homeowner credits, deductions and exclusions that you may want to discuss with your accountant before filing your taxes:

PMI Deductions: Many of today’s homeowners pay monthly private mortgage insurance or PMI. Basically, if you put less than 20% down when you bought your home, you are able to deduct your PMI, as long as you meet the income limits set forth by the IRS.

Home Equity Loan Interest: If you borrowed a home equity line of credit against your home this year or in past years, you are able to deduct the interest you paid in 2014 and you can continue to do this annually for the life of that loan. If you haven’t taken this deduction in the past, start taking advantage of it now!

Second Home Deductions: If you own a second home, either for vacation or rental purposes, you may be able to deduct your mortgage interest payments and property taxes. For rental properties, you may also be able to deduct some of those annual home maintenance costs, too.

Net Sales Gains: This exclusion can be a bit tricky. But, if you sold a home in 2014 that you had used as a primary residence for two out of the last five years, you may not be taxed on your net sales gain. That means you may not be taxed on the amount that is left over after subtracting the purchase price and the cost of any improvements from the home’s selling price.

Energy Tax Credit: Just another benefit of being more energy-efficient, homeowners who make home improvements to save energy may qualify for up to a $500 tax credit. This energy credit can include improvements to windows, insulation, doors and even roofing materials!

Moving Expenses: When a move is job-related, those moving boxes, packing tape and even the costs paid to the moving company you hired may be tax deductible. In fact, you can even deduct the cost of relocating Fido or Fluffy if your move was related to your career!

Home Office Deductions: Speaking of career-related deductions, if you maintain a home office, you may also be able to claim some business expenses as deductions. You may be able to write-off a portion of your home’s square footage, along with a portion of your utility payments, internet costs and even office supply charges.

Back-to-School Credits: Not altogether different from home office deductions are educational expenses. If you’re advancing your education, you may be eligible to claim tuition or other educational expenses on your taxes.

Casualty Loss Credits: Although this is never a deduction to plan on, it is a good one to know about, in case of an unfortunate circumstance. If you suffer a loss of more than 10% of your gross income due to a large storm or other natural disaster, you are able to claim that loss on your income taxes.

Forgiven Debts: Again, this is probably not a scenario that homeowners want to get in line to capitalize on; but, if you lost your home to a foreclosure or short sale in 2014, the taxes on that sale are forgiven. You will not be taxed for those debts.

When it comes to tax deductions, credits and exclusions for homeowners, it is always best to confirm eligibility with a professional. But, if you think you may qualify for some of these homeowner tax breaks, it may pay off to talk to your accountant before filing your taxes this year!