It’s tax season. Yes, again. And while this might not be your favorite time of year, it’s best to be prepared and know what to expect before April 15.
First things first. I’m sure you’ve heard by now that the need for itemized deductions has decreased this year due to the Tax Cuts and Jobs Act (TCJA). While the standard deduction amount has increased, some costs that used to be deducted, such as moving expenses, no longer count toward itemization. While you may think you just need to use the standard deduction, take a look at the below tax write-offs specifically for homeowners to help you decide whether you can save some extra money.
1. Mortgage interest
Most homeowners will be able to deduct most — or even all — of the interest they paid on their mortgage in 2018. You can deduct the interest up to $1 million if your mortgage originated before 2017, and up to $750,000 if it originated after 2017.
You can also deduct the interest on a home equity loan if you used it to buy, build, or improve your home below the $750,000 limit.
2. Renewable energy improvements
Some home improvements can count toward your deductions, as well, if they’re focused on renewable energy. Installing items such as solar panels, solar water heaters, or other alternative energy sources will help you qualify for the Residential Renewable Energy Tax Credit.
3. Capital gains
Another exemption may be if you sold a home. You could deduct your capital gains from the sell up to $250,000 for single filers and up to $500,000 for married filing jointly. Of course, the home you sold must have been your primary residence for at least two of the five years leading up to the sale, and you can only claim it if you haven’t claimed capital gains on another home sale in the last two years.
4. Property taxes
If you pay property tax on your home, car, boat, airplane, or other personal property, you can count it toward your itemized deductions. The Tax Cuts and Jobs Act limits the total amount of state and local taxes (also known as SALT) you can deduct to $10,000 per year. This limit applies to both property taxes and state income tax, combined.
It’s not too early to start looking into ways to reduce your taxes for the 2019 tax year. Looking to make some home improvements? Give us a call.