Owning a home comes with numerous benefits, and one of them is the opportunity to claim various tax credits and deductions. Let’s look at some ways you can maximize your tax savings as a homeowner this year.
주택을 소유한 납세자는 많은 세제혜택이 있습니다. 이러한 세제혜택 중 하나가 주택을 보유한 세액공제와 공제를 청구할 수 있는 기회입니다. 올해 , TY-23(2024년) 주택 소유자인 납세자의 절세 효과를 극대화할 수 있는 몇 가지 방법은 아래와 같습니다.
At a glance:
- Choose between itemizing or taking the standard deduction depending on tax savings potential.
- Homeowners can deduct property taxes, mortgage interest, and explore homestead exemptions.
- Understand capital gains tax rules when selling a home, including exclusions for profit up to $250,000 (or $500,000 for joint filers).
- Consider energy-efficient home improvements for tax credits like Energy Efficient Home Improvement and Residential Clean Energy Credits.
1. Decide whether you want to itemize or take the standard deduction
When filing your taxes as a homeowner, you have a choice between itemizing your deductions or taking the standard deduction. Which option is best for you depends on several factors — most importantly, whether your itemized deductions would give you a bigger tax break than the standard deduction.
Here are the standard deduction rates for tax years 2022 and 2023:
| Tax Filing Status | Standard deduction 2023 | Standard deduction 2022 | |
|---|---|---|---|
| Single | $13,850 | $12,950 | |
| Married filing jointly and surviving spouse | $27,700 | $25,900 | |
| Married filing separately | $13,850 | $12,950 | |
| Head of Household | $20,800 | $19,400 |
When taking the standard deduction, you won’t be able to take certain homeowner deductions that are only available to itemizers. However, for many people, the standard deduction is still the best option because their itemized deductions would amount to less than the standard deduction. It’s all about which option will get you the biggest tax break.
2. Claim tax deductions and tax credits available to homeowners
What do homeowners get to write off on taxes?
Homeowners have the option to deduct the following:
- Property tax deduction – Married couples filing jointly can deduct up to $10,000 of property taxes, while single filers and those married filing separately can deduct up to $5,000. This deduction is only available if you itemize.
- Mortgage interest deduction – This deduction allows you to lower your taxable income by deducting mortgage interest you paid during the year. This deduction is limited to interest on up to $750,000 of qualified mortgage debt for single filers, heads of household, and those married filing jointly. If you are married filing separately, the limit is $375,000. This deduction is also only available to itemizers.
- Homestead exemption – Most states offer a homestead exemption to minimize property taxes for homeowners, but the rules and eligibility requirements vary greatly by state. To learn if you might qualify, head over to your county tax assessor’s website.
We’ll go over some other tax breaks available to homeowners — such as the Energy Efficient Home Improvement Credit — in more detail below.
What is the difference between deducting and depreciating?
First things first: You can only take advantage of real estate depreciation if you are a rental property owner who uses the property in your business. This deduction is not available to general homeowners for their primary residence.
That being said, the tax deductions we’ve discussed — property taxes and mortgage interest — are deductible in the year you’ve spent the money. Real estate depreciation is different in that you spread the deduction out over the useful life of the property.
How much of your mortgage can you write off?
While you can’t write off your entire mortgage payment on your taxes, you can deduct the interest on a mortgage up to $750,000 (or up to $375,000 for those married filing separately).
What does the homestead exemption do?
The homestead exemption is a reduction in the taxable value of your property. As an example, let’s say your home is worth $350,000 and your property tax rate is 1 percent ($3,500). If your state allows you to exempt the first $50,000 of your home’s assessed value, the taxable value of your home would drop to $300,000, reducing your tax bill to $3,000.
Information Tip
As a homeowner, understanding the various tax credits and deductions available to you is crucial for maximizing your tax savings. By implementing energy-efficient upgrades, taking advantage of tax deductions, and properly documenting expenses for home improvements, you can significantly reduce your taxable income.
