8 tax breaks that homeowners are often unaware of

Photo: depositphotos.com

The tax season is in full swing, and if you bought a house in 2016 a year or earlier, you probably want to take advantage of one of the many tax breaks you are entitled to. Resource Credit.com talked to Mark Luscombe, chief analyst at Wolters Kluwer Tax & Accounting. He advised homeowners to look at the following tax breaks as they prepare their tax reports.

1. Mortgage deduction

According to Luscomb, in 2016, the Internal Revenue Service (IRS) agreed to change the deduction method for a mortgage loan. Now, a mortgage deduction can be made not for each house, but for each taxpayer.

This means that if you own a house with another taxpayer not related to you, each of you is entitled to a tax deduction on a mortgage loan. The size of the deduction is up to $ 1 million on the principal amount of the debt for the purchase or repair of the house, and additionally up to $ 100 thousand on the principal amount of the debt secured by the house if the money was spent on other needs.

“However, if the taxpayer 2 marries, they together have the right to a total mortgage deduction of up to $ 1,1 million,” adds Lascomb.

2. Insurance mortgage premiums and canceled debts

The tax deduction of insurance mortgage premiums was abolished at the end of 2016, but it is still valid for tax reporting for 2016. In the same way, the exclusion from taxation of write-offs on mortgage loans (from the end of 2016) is no longer in force, but this rule still applies when filing tax reports for the last year.

“To determine whether taxpayers correctly indicate the amount of mortgage interest deduction, mortgage lenders are now required to submit a report on the 1098 Form and include not only mortgage interest received for the year, but also the amount of the mortgage principal, date of issue of the loan and address real estate, ”says Luscomb. If you have not received your 1098 Form by mail, you can download it or request another 1 instance.

3. Tax discounts, related с with energy

Homeowners can take advantage of two types of energy tax rebates.

• Non-business energy mortgage) ended at the end of 2016, but you can use it when filing reports for 2016. This is a $500 loan with no expiration date for renovations related to energy-efficient windows, doors, insulation and roofing, as well as certain home systems.
• There are residential energy saving mortgage loan (residential energy efficient property credit) on things like solar or wind installations. It is extended to 2021.

4. Exclusion of income from the sale of capital property

If you own your main residence and have lived in it at least 2 of the last 5, then you can use the exception of making money from selling it. The exemption amount is up to $ 250 thousand per taxpayer or up to $ 500 thousand if there are several of them.

5. Inherited Property

When you inherit a certain asset, its original price is “value added” at the date of death. This helps you avoid capital gains taxes on this property. Here's how it works: For example, your grandfather died and left you and your brothers and sisters your home. He was valued at $ 500 thousand at the time of his grandfather's death, but the price he paid for it was 30 years ago, the original price of the house was $ 100 thousand. You and your brothers and sisters may have to pay taxes on real estate and inheritance depending on its size, but you will not have to pay capital gains tax on $ 400 thousand earned on this house.

“The added value at the time of death is available for use at the main place of residence,” says Lascombe. “Nevertheless, discussions are now underway to abolish the tax on inherited property and switch to another method for estimating the value of inherited property. Therefore, it is unclear how long this law will be valid. The added base value means that the heir, who then sells the house, will pay taxes from the minimum part of the earnings, because the initial cost will be raised to the value on the date of death of the previous owner of the house. ”

6. Tax on property

Today, real estate taxes on residence can also be deducted. But in Congress, they are now discussing a proposal for tax reform, which will cancel this subtraction.

7. Home office costs

If you use part of your home for commercial activities, you may be able to deduct some of the business costs. Subtracting home office costs is available to homeowners and tenants and is applicable to all types of homes. More information on this item can be found. on the IRS website.

8. Relocation costs

If you moved because of a change of job or moving company, in which you work; If you started a new business or company, you may be able to deduct your relocation costs. To obtain such a tax benefit, the IRS requires that certain conditions be met:

• Your relocation is closely related to starting work;
• You meet range criteria;
• You meet the time criteria.

A more detailed explanation of the criteria, as well as answers to many other questions on taxation can be found in the Russian version. IRS website.

See also:

Tax education. Who must file a declaration in the USA

Who pays what taxes in the USA

How to pay taxes in the US if you work for yourself

How does the USA pay taxes paid abroad?

Do you want more important and interesting news about life in the USA and immigration to America? — support us donate! Also subscribe to our page Facebook. Select the “Priority in display” option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram  and Instagram- there is a lot of interesting things there. And join thousands of readers ForumDaily New York — there you will find a lot of interesting and positive information about life in the metropolis.