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Countdown to Deductions: Year-End Tax Tips for Homeowners
Did you buy a home in 2023? Congratulations! In addition to all the obvious benefits of owning a house, you may also qualify for a variety of tax incentives. Even if you didn't buy this year, you'll discover there may be opportunities to save. Our REALTORS® want you to know them!
Much like tax brackets, tax incentives are subject to change every year. However, one thing remains consistent: Tax breaks for homeowners. By providing these perks, the hope is that more people will take the plunge and buy Mansfield homes for sale.
The best way to learn about tax advantages in any situation is to consult a tax professional. You should consider articles like these as a starting point and bring any questions to an expert. With that in mind, let's take a closer look at some 2023 tax details you should know about:
- Mortgage Interest on Residences
All homeowners have the opportunity to deduct mortgage interest on a primary residence, no matter how long they occupied it in a year, as long as they made payments. Likewise, most people with a second residence can use the same deduction on it, although there are limits. - Points Paid When You Bought a Home
No matter if you paid for points or the seller did, you may benefit from tax deductions on points paid. These "points" represent prepaid interest borrowers can opt to pay the lender at the time of closing. One point represents 1% of the loan amount and is usually paid by the buyer directly. - Home Improvements for Medical Care
If you need to update your home for medical purposes, you may benefit from tax help. For example, say someone in your home has been diagnosed with a condition that confers mobility impairment. If you now need grab bars in the shower or a lift for the stairs, these may earn tax incentives. - Home Equity Loan and HELOC Interest
Although not pertinent for those who bought a home this year, a homeowner who has built up some equity might take on a home equity loan or home equity line of credit (HELOC). This acts as a second mortgage, which means you can deduct the interest if used for home improvement or renovation. - Remember Standard vs. Itemized Deductions
No matter what 2023 held for you, remember that you can save more on taxes if your itemized deductions exceed the standard deduction. The standard deduction for 2023 is $12,950 for single or filing separately, $25,900 for married filing jointly, and $19,400 for head of household. - Home Office Deduction
If you are a business owner whose primary place of business is your home, you can deduct home office expenses from your taxes. The deduction is based on the percentage of your home used to work. Be careful, as it is very easy to overestimate this deduction, which can lead to an audit. - Private Mortgage Insurance
Some lenders require private mortgage insurance as an additional hedge against the possibility you may default on your loan. It's only necessary until a certain level of equity. As an additional expense, it'll impact how much interest you can deduct using itemized deductions.
Contact us to learn more about Ohio real estate.