4 Ways Your Home Can Lower Your Taxes

Tax season doesn’t have to be all about stress and expenses. Homeownership can unlock valuable tax benefits — like deductions, credits and more — that could save you money.

From property taxes to energy-efficient upgrades, here are a few ways your home could help lighten your tax burden this year.

1. Property Tax Deductions

Property taxes are deductible up to $10,000 (or $5,000 if you’re married and filing separately). This includes any taxes you reimbursed to a seller on a recent home purchase. Keep in mind that deductions must be properly itemized.

2. Home Mortgage Interest 

Interest paid on first and second mortgages, home equity loans, HELOCs, home improvement loans and refinances may be eligible for deduction. This interest must be paid on a primary or second residence to qualify. Deductions may be limited based on the loan date, refunded interest and the home’s fair market value.

3. Energy-Efficient Home Improvement Credit

Energy efficiency upgrades on your primary residence could net credits up to $3,200 annually. That’s up to:

• $2,000 per year for qualifying heat pumps, water heaters, biomass stoves and boilers.
• $1,200 per year for efficiency-related property costs and upgrades (e.g., exterior doors and windows).

Not sure if your recent upgrades qualify for a tax credit? Check your paperwork — typically, qualified appliances will come with a certification. Otherwise, you can consult a tax professional to determine if your renovations qualify.

4. Home Renovations as Medical Expenses

Renovations made to alleviate health concerns may be claimed as medical expenses. This includes entrance ramps, walk-in showers, safety rails and modifications to doors and stairways. However, elaborate upgrades that increase your home’s value may not always qualify as a medical expense.

Thinking about renovating or tapping into your home’s equity? Smart financing options could help you save. Reach out to discuss your options today.