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5 Tax Deductions for Florida Homeowners

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16 Sandy Hook Rd S

16 Sandy Hook Rd S, Siesta Key

Owning a home can be a considerable expense. With tax day, April 17, 2018, approaching, we are presenting five potential deductions for homeowners. Recent tax reforms are changing the rules as we go into 2018 but those who purchased prior to January 1st will not be effected by the new laws. Talk with your CPA directly if you have any questions or to determine if you qualify.

Mortgage Interest

If you have an existing mortgage, up to a $1 million loan for a couple filing jointly, you can deduct the mortgage interest payments you are making from your tax return. However, a change to the tax laws went into effect for mortgages acquired after 2017. Moving forward, taxpayers will only be able to deduct interest on mortgage debt that totals $750,000 (or $375,000 for married couples filing separate returns). View more information on deductible mortgage interest at IRS.gov.

Vacation Homes: If you purchased a second home prior to 2018, you can deduct mortgage interest as long as your combined mortgages are under $1 million. It is important to note that recent tax reforms have also changed the rules relating to second homes – any vacation homes purchased after 2017 are no longer permitted to deduct mortgage interest under this rule. Learn more about deducting interest on second residences at IRS.gov.

Mortgage Points and Insurance

If you purchased a home in 2017, loan points for your primary residence may be deductible.  Related to Mortgage Insurance Premiums, policies issued after 2006 and through 2017 can qualify for deductions if you earn less than $109,000. Again, due to recent tax legislation, unless Congress renews this deduction, 2017 will be the last year it can be claimed. Learn additional details about points at IRS.gov.

Property Taxes

Yes, you can deduct your property taxes off your tax return! Keep your property tax bills and proof of payment. Note that starting 2018, state and local tax deductions will be capped at $10,000. Learn more about deductible taxes at IRS.gov.

Medical Home Improvements

Any changes that have been made to your home related to medical reasons for you, your spouse, or your dependents are deductible. Whether you are constructing entrance ramps, adding handrails, or even an elevator, improvements may be included if you itemize your deductions. However, be aware that any changes that add value to your home – such as installing an elevator – may be deducted only to the extent they exceed the increase in the home value caused by the improvement.

Beyond improvements, you can also deduct any fees related to operation and upkeep of that improvement. For example, the cost of electricity to operate the elevator, or the service of a maintenance man. Read more related to medical and dental expenses at IRS.gov.

Energy Efficient Upgrades

Renewable Energy Tax Credits allow you to deduct 30% of the costs of major energy installations including solar water heaters, solar panels, geothermal heat pumps, small wind turbines, and fuel cells. The installations only qualify if they have been done to a home you own and use as a residence. There is also a gradual step down to the credit value between now and 2022. Learn more at IRS.gov. To apply, you must file IRS form 5659 with instructions here.

EnergyStar products and qualified energy-efficient products are also eligible for tax credits – 10% of the cost up to $500. These may include insulation, exterior windows and skylights, water heaters, and central air conditioners. You can find out what qualifies on the EnergyStar website.

 

We encourage you to speak with your personal accountant to determine the tax deductions for which you are eligible. To learn more about Manatee, Charlotte, and Sarasota real estate visit MichaelSaunders.com.

5 Tax Deductions for Florida Homeowners was last modified: August 24th, 2018 by Kathryn Parks

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