12 Deductions To Help Shrink Your Tax Bill
Tax time is quickly approaching, and in a rush to get all of your papers together you might overlook potential savings,
These 12 tax-saving tips can help you plan ahead and save:
1) Mortgage Interest:
This can be a huge deduction since interest payments are the largest component of your mortgage, and the U.S. tax code allows you to deduct the mortgage interest!
2) Closing Costs:
In the tax year you buy your home, you are able to claim the points on your loan even if paid by the seller, and the common 1% origination fee can lead to a considerable savings!
3) Property Tax:
You can deduct both your primary home and your vacation homes property taxes.
4) Home Equity Lines:
You can deduct the interest you pay on your home equity loan as well as shift your credit cards debts using home equity lines and pay a lower interest rate than the credit card interest rate, and in return get a deduction on that interest as well...
This one's tricky, if you paid points when refinancing your mortgage it is tax deductible. Remember, you have to spread that cost out over the term of the loan- and take only a credit for the adjusted amount each year.
6) Home Sweet (Second) Home:
You can write off the interest on both your homes total mortgage debt up to 1.1 million. Property taxes on your second home are also tax deductible.
7) Short-Term Rental:
If you have paying guests staying for longer than 14 days or if you rent it out for more than 14 days within a year, all rental income is now tax deductible. For more info please see your tax pro for details.
8) Capital Gains:
If you purchased your home prior to 2003 it has likely appreciated in value, and this tax benefit will come in handy. Visit irs.gov for guides to taxes when selling.
9) Unexpected Move:
When selling your home and moving 50 miles away or more due to unforeseen circumstances, depending on how long (two years or fewer) you have owned your primary residence you can prorate the taxes on your profit, which means you keep 25%, 50%, or even 75% of your profit (tax-free).
10) Health-Related Upgrades:
If you are required to make home improvements on youe home due to medical issues for yourself, spouse, or dependents,(must be doctor recommended) you can deduct the cost of those improvements).
11) Home Office:
If you have a home office, you can deduct $5 per square foot of designated home office space up to 300 square feet. With the new tax rule it will allow you to deduct up to $1,500.
12) Going Green:
Energy-efficient improvements, gives you a thumbs-up from Uncle Sam in the form of a tax deduction.. with any significant (green) improvements done to your home which contributes to higher energy efficiency, you can deduct up to 10% of the cost (up to a maximum of $500). Upgrade equipment and get a credit of 30% of the cost.
So remember it's always good to double check and make sure you have everything you need to get better tax breaks.
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