5 Homeowner Tax Breaks You Should Be Taking Advantage Of

2019 comes with some tax reform and specific changes that you and your CPA should be aware of. Regardless, there are specific tax breaks you as a homeowner should be taking advantage. The tax changes did not affect these write-offs, but it is always good to check with your accountant before assuming you can receive a credit for anything.

Interest on home-improvement loans

The IRS considers the interest on a home-improvement loan fully deductible, up to $100K in debt. So if you’ve been holding off on making those home changes, consider using a loan so you can write off the interest. In addition, interest paid on a home equity line of credit (HELOC) is also tax-deductible. However, keep in mind that any home loan that is worth more than the value of the property is not deductible.

Property Tax

You might think all of your property taxes are deductible, and in most cases you would be right. Though, there are some specific things on your settlement document that might look like taxes but aren’t. You cannot deduct your attorney and appraisal fees, title insurance and credit report costs either.

Residential Renewable Energy Tax Credit

If you made efforts to make your home more energy-efficient then you could qualify for the energy-efficiency tax credit. This credit includes solar, wind, geothermal and fuel-cell technology. So, if you installed solar panels, solar-powered water heaters, wind turbines or geothermal heat pumps then you may qualify for this tax credit.

Non-business Energy Property Tax Credit

In addition to the major energy-efficient renovations, you could also qualify for the nonbusiness energy property tax credit. This would include more minor upgrades to the home, such as home insulation, exterior doors, exterior windows or certain roofing materials.

Home improvements for medical purposes

This is an interesting one and many times overlooked. If you made any home improved that were related to a medical necessity then you can deduct the cost of the home improvement under medical expenses. Let me give you two scenarios in which this could be applicable:

A first time homebuyer has to remove all the carpets in their new house because the carpets were so full of pet dander from the previous owners. As a result, the new homeowner was having asthma attacks or trouble breathing. Removing the carpets and replacing them (with whatever they choose) would be deductible under medical expenses if you can provide documentation proving the medical issue.

In another scenario, and elderly woman had an accident and fell in her shower. She broke her hip and would be in recovery for months. Medical recovery prevented her from climbing stairs or climbing into a bathtub. The issue was the only walk-in shower she had was upstairs on the second floor. As a result she had to remodel one of her down stair bathrooms into a walk-in shower. This could be deducted under medical expenses as long as she provided all necessary documentation.

We hope all this information was helpful as you work on your tax return this year. Don’t forget to check everything with your accountant. And don’t forget to hire Divinity Inspection Services for your residential or commercial property inspection needs.