Tax Deductions For Homeowners; What Are Their Benefits?

There government has rewards for buying and owning a home: tax deductions. According to Realty Times, these are a welcome gift from the government that homeowners should not miss out.

From the year someone purchased a house and even in the following years, any amount paid to the local state, county and city property tax assessors, called property tax, is deductible. The Mortgage Reports said that monthly interest paid on home equity loans (HELOAN) and home equity lines of credit (HELOC) are tax-deductible for most of the U.S. homeowners who carry them on their homes, though it has restriction.

Homeowners who raise their mortgage debt loan beyond their property's fair market value will find that mortgage interest paid is ineligible for deduction, it explained. However, only few U.S. homeowners are affected by this as majority are eligible to claim mortgage interest paid as a deduction, it added.

"Discount points paid at closing at considered a prepaid mortgage interest. Discount points paid, therefore, can be tax-deductible. Mortgage insurance paid, however, is not -- at least, not any longer," reads the article. Mortgage insurance paid was tax-deductible between Jan. 1, 2007, and Dec. 31, 2013, but the tax-deductibility of mortgage insurance has not been renewed by Congress, it explained.

If you are working from home which is the main place of business and you meet the IRS guidelines for home businesses, you can get a deduction for the workspace dedicated to your business. Aside from that, you can also depreciate your workspace over 39 years and all the improvements to it are tax deductible. Security expenses, phones, Internet costs, computers, insurance, and utilities relating to your business can be deducted or depreciated according to IRS allowances, Realty Times reports.

Even in purchasing an energy-efficient system or appliance for your home is tax deductible. If it meets government Energy Stars standards, a portion of the expenses can be deducted.

There is also the property sales deductions wherein you could be eligible for some capital gains exclusions up to $250,000 if you are single or $500,000 if you are married and you purchased a home, occupied it as primary residence and then sold it in two years. If you have it rented after your two-year stay, you could still be eligible for capital gains exclusion.

Another tax you can seek for deductions is for the closing costs. The report said that a homeowner can deduct some moving expenses and items for home offices.

Aside from these, there are many other deductions that a homeowner can take advantage of, the report said. The best thing to do is to save your tax records like receipts, credit card statements, cancelled checks, and online banking up to seven years and seek assistance to enjoy them.