So, the federal income tax filing date is right around the proverbial calendar. In just two weeks time, Uncle Sam will be eagerly awaiting returns from earners across the country. At the same time, homeowners will be feverishly working to find every single deduction and credit they can legitimately take to easy the blow to their bank accounts.
As tax laws have changed, those credits and deductions change in amount, or disappear. In their place come new ones, but that only serves to add to the overall confusion which already exists. Fortunately, there are some items which can be counted on from years past which are still allowable today.
Homeowner Tax Credits and Deductions
Fortunately, if you own your own home, you are able to claim several things which do help to offset paying out of pocket to the government. Getting the figures right is key as miscalculations can cause a return to be rejected, subject to re-examination, or in rare instances, lead to an audit.
“The good news is you can deduct many home-related expenses. For many homeowners, the effort of itemizing is well worth it at tax time. Some, however, might find that claiming the standard deduction remains their best move. If you do find that itemizing is best for your tax situation, here’s a look at homeowner expenses you can deduct on Schedule A, ones you can’t and some tips to get the most tax advantages out of your new property-owning status.” —Bankrate.com
Let’s look at the biggest, most common homeowner tax credits and deductions available for tax year 2013:
- Property taxes. This is one of the longest lasting tax deductions on the books and you can deduct all the taxes you’ve paid on your homestead or primary residence. Second homes are a different story and depend on how they are used.
- Home improvements for medical care. If you made improvements to your home for medical reasons, these are generally deductible, but not all are.
- Mortgage interest. All that interest you pay on the principle is fair game to deduct from your income.
- Points for new purchases. If you bought your home in 2013 and paid points, you can write those costs off on your return.
- Energy improvement credits. If you installed a new roof, certainly energy efficient appliances, and/or doors and windows, those too, are allowable.
- Child and parent care. Most people know that child care expenses are allowable, but don’t realize caring for a parent has the same benefits.
What’s Off Limits on 1040 Line Items
Of course, you can’t go crazy and write off every expense. Here’s a list of things you might think are deductible but are actually off limits:
- Homeowner association dues. Though these may add up over the course of the years, they aren’t allowable deductions.
- Home insurance. Homeowner’s insurance is also off limits on the lines of your 1040.
- Costs of aesthetic improvements. If you added a deck, put in a pool, or overhauled your landscape, those don’t qualify.
- Appraisal fees. While there are a few expenses which can qualify to claim, appraisal fees for selling or buying a home aren’t typically allowable.