Whenever April approaches, people start to think of two things: spring and taxes. While most people welcome the arrival of spring, very few cheer at the impending tax deadline. Paying taxes, however, is something we all have to do. When it comes to paying taxes, though, we should pay only the right amount and not a cent more. Interestingly enough, many people aren’t aware that they are qualified for certain tax deductions. This means they are paying more than what’s required of them. For instance, homeowners can enjoy a few tax deductions and benefits. Individuals who own their homes are qualified to file for certain tax exemptions, the exact details of which depend on many factors. It’s important to learn about these tax exemptions as they may enable you to save a lot of dollars come tax season. Consult a qualified tax professional to be certain you qualify for the tax deductions mentioned below.
Tax Deductions from Mortgage Interest
Most homeowners today are paying for their homes from a mortgage loan. (Note: Be sure to compare rates if you’re looking to apply for a New Mortgage or to Refinance an Existing Mortgage.) Each month, you’re paying back not only a portion of the money you owe but also interest. This interest is tax deductible, which means you can include these as tax exemptions when you file for your taxes come April 15. The maximum amount you can file as a tax deduction will depend on several factors, including the actual amount you’re required to pay each month. In order to find out just how much you’re qualified to file as a tax deduction, consult with your accountant or tax advisor.
Tax Deductions on Other Home Loans
In addition to home mortgage loans, you can file tax deductions on other home loans such as home equity loans and other lines of credit. The interests from these loans are tax deductible, just as in the home mortgage interest. The tax deductions for which you qualify on these other home loans will also vary depending on several factors In order to find out the exact percentage or amount you can deduct, you should once again consult with your accountant or tax advisor.
Tax Deductions on Home Improvement Costs
Each time you renovate your home or do even the smallest repairs, it is to your advantage if you keep all the receipts and documents relevant to the home improvement. When tax season comes, you can take out all these documents and use them to reduce the amount of tax you are obliged to pay the government.
Limitations on Tax Deductions
If you have a second property, several expenses related to it are tax deductible as well, particularly if you’re using it as a rental property. Such tax deductions may be applied on property taxes, home insurance, and business transactions. Some expenses, however, are not tax deductible. These expenses include utility expenses, non-rental insurance (fire insurance, for example), and non-interest expenses on mortgage loans.