Home Expenses You Can Add To Your Tax Return Next Year - Home & Texture
Homeownership Deductable Home Expenses

8 Home Expenses You Can Add To Your Tax Return Next Year

Don't forget to add these items to earn big.

By
July 11, 2024 at 9:44 AM PST
Homeownership Deductable Home Expenses

8 Home Expenses You Can Add To Your Tax Return Next Year

Don't forget to add these items to earn big.

By
July 11, 2024 at 9:44 AM PST

Tax season is one of the most dreaded times of the year, but for some homeowners, there is a silver lining: tax deductions. A lot of people are able to save money each year by deducting certain home expenses, and if you have a home, you probably can, too.

Knowing what you can add to your tax return next year can ease that financial burden many people feel when April rolls around. Not to mention, depending on what you qualify for, you may even be able to put some cash back in your pocket.

To make sure you’re not leaving any money on the table, here are eight common home expenses that you can deduct on your tax return.

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Mortgage Interest

If you have a mortgage on your home, you may be eligible to subtract the interest you pay on that loan from your taxes. This can be a very large amount, especially in the early years of your mortgage when most of your payments are put toward interest.

What To Do: Ask your lender for Form 1098 stating how much interest you paid over the year.

Property Taxes

Paying property tax is a pain — that is, until tax season rolls around. You can deduct the amount of state and local property taxes you pay on your home, which is really nice if you live in a neighborhood with high property taxes.

What To Do: Maintain a record of your tax payments, but keep in mind that there is a cap on this deduction, so be sure to review the current IRS limits ahead of time.

Energy-Efficient Improvements

Installing solar panels, energy-efficient windows, or a new HVAC system are excellent ways to save energy, but they’re even better at saving money come tax time. These credits directly reduce your tax bill, which is more beneficial than a deduction.

What To Do: Keep all receipts and records of any home improvements.

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Home Office Expenses

If you have a home office, it might qualify for a deduction if it’s used strictly for business purposes. This can include a portion of your mortgage or rent, utilities, insurance, and other related expenses.

What To Do: You can use either the simplified method or the regular method. The simplified option is easier but you might not get as much money back. On the other hand, the regular method involves more math but could save you more.

Medical Home Improvements

Medical improvements — i.e. installing ramps, widening doorways, or adding handrails — are eligible for deduction as long as any improvements made are medically necessary and prescribed by a doctor.

What To Do: Keep all documentation from your healthcare provider and contractors. Keep in mind you can only deduct medical home expenses if they cost more than the increase in your home’s value.

Home Equity Loan Interest

If you’ve paid interest on a home equity loan or line of credit, you might be able to add it as an expense if you used the money to buy, build, or improve your home. However, the rules around this deduction have changed in recent years, so be sure to check the current IRS guidelines to play it safe.

What To Do: Keep detailed records of how you used the loan money to prove you qualify.

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Photo credit: RDNE Stock project

Home Sale Exclusions

When you sell your home, you might be able to exclude some or maybe even all of the profit from your income if you meet certain conditions. For example, if you’ve lived in the home for at least two of the five years before making the sale, you could potentially exclude up to $250,000 of profit if you’re single or $500,000 if you’re married.

What To Do: Keep records, meet residency requirements, and know what the exclusion limits are for potential tax savings.

Rental Property Expenses

If you rent out all or part of your home, you can deduct whatever expenses relate to the rental portion. This includes things like repairs, maintenance, and even depreciation.

What To Do: Keep detailed records of all rental income and expenses to cover your claims.



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