If you own real estate and find yourself taking the standard deduction on your taxes year after year, you may be missing out. Several tax deductions are available for property owners, but many of them are regularly overlooked. Here are the three most commonly forgotten tax deductions for real estate that you might be able to take.
Green Home Improvements
Have you made changes to your home that improved its energy efficiency? The government wants to encourage efficiency and offers tax incentives for some of these improvements. For example, dual-paned windows or low-flow plumbing appliances may qualify you for tax credits or breaks. The tax advantages you are qualified to receive may vary depending on your state, so talk to your tax advisor about what is available to you.
Mortgage interest is a deductible expense, yet the American Institute for Economic Research found that only about 63 percent of homeowners itemize, and thus have the ability to take this deduction. The remaining 37 percent are not taking this tax break. If your mortgage payment is large, you could be missing out by not taking this deduction option. Along the same lines, many homeowners are not taking the deduction available for their property tax bills. Consider talking to a tax lawyer or other tax expert about whether or not it makes sense for you to itemize so you can take these deductions.
Sometimes homeowners will pay points, which are upfront fees at the closing, to lower the interest rate over the life of their loans. If you use the points to buy your primary place of residents and payment of points is common in your area, you may be able to deduct them the first year that you have the home loan.
You may also be eligible for this tax break if you paid points to refinance. However, to take these points you must deduct the points over the loan’s lifetime. This is a smaller deduction, but one worth taking if it is available to you.
If you are not already taking these tax breaks and own real estate, consider finding out more about the tax incentives available to you. KDAO can help you dig through the rules and regulations to ensure you are taking all potential real estate tax breaks.
Klein, Daday, Aretos, & O’Donoghue, LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.