If you own a home, then you almost assuredly know about the big tax breaks you get, including the mortgage interest, property tax, and interest on a home equity loan. However, there are more tax benefits that homeowners can take advantage of.
Here's a look at three tax breaks homeowners shouldn't forget about -- if you qualify, you're leaving money on the table. And while some of these aren't exclusive to homeowners, the tax breaks below are things that homeowners will be much more likely to take advantage of. Don't skip out on these tax breaks if you qualify.
Self-employed or run a small business? Deduct home repair and maintenance expenses
More and more Americans are working from home, whether it be running a small business as their primary work or a secondary source of income such as selling products online. If that's your situation, you can probably get some tax benefits if you use a portion of your home exclusively for conducting business, whether you own your home or not.
However, if you're a homeowner, you could get an even bigger tax break. That's because maintenance and repairs done to the home could be partly deductible from the income your small business produces. This would typically apply to repairs or maintenance done to the entire home, such as exterior painting, a new roof, or other whole-home repairs. You would also be able to deduct the full amount of repairs or maintenance done exclusively to the area you use for conducting business.
There are a number of energy-efficient upgrades to your home that may qualify for a tax credit, ranging from a few hundred bucks to thousands of dollars in value.
The Nonbusiness Energy Property Credit -- which is a dollar-for-dollar credit against taxes paid or owed -- is worth 10% of your purchase price (does not include installation) for qualified energy-efficient improvements, including insulation, exterior windows and doors, and others. The lifetime credit is $500 and no more than $200 of that can apply to windows.
There's also the Residential Energy Efficient Property Credit, which offers a credit of 30% of the cost (including installation) of certain alternative energy efficient equipment, including solar hot water heaters, solar electricity systems, wind turbines, and even fuel cell systems.
So if you're planning to make one or more energy-efficiency upgrades to your home this year, take advantage of tax benefits as well as the lower energy bills.
Unreimbursed property losses
While insurance will typically cover these losses, it may not cover everything. If you are unfortunate to suffer from an uninsured loss or damage to your property or if your insurance doesn't cover everything, you could be eligible for the casualty deduction for those out-of-pocket expenses.
This could include theft losses as well as damage losses to your home, household items, and automobiles. And while it won't mean you're off the hook for those expenses, it will make it a little less painful if you can at least deduct a portion of those out-of-pocket costs from your taxable income.