Tax Season is upon us and homeowners are always looking for ways to save on taxes. If you are a new or current homeowner your biggest tax break will be the interest on your mortgage. Up to $750,000 of debt if filing jointly and $375,000 if filing separately. For mortgages in place before 2018, the interest on up to $1 million of debt is deductible. This will also include improvements for anything that adds substantial value to your homes, such as a renovation or addition. 

If you work from home you may be able to deduct expenses that pertain to your home office. This includes any part of your home that you use to earn income. Figure out what percentage of your home or rental you use for gaining monetary income. This includes your utility bills, insurance, and repairs, and can be deducted against your business income. Talk to your accountant about the exact percentage you should use.

If you are a homeowner you now have to pay property taxes and in Texas, we know these are substantial as we have no state income tax so… the government has to get income from somewhere. You may be able to deduct state and local property taxes on your federal tax return. But, you have to itemize your return to deduct these deductions and there is a $10,000 limit ($5,000 for those filing separately) but it is better than nothing!

For those of you selling in this market, to realize your gains in home value, you will only need to pay tax on anything over a $500,000 gain ($250,000 for single filers). You must have owned or lived in the home for at least 2 out of the past 5 years, however. But still, this is a great time to sell. Contact me if you would like a valuation of your home.

Christy Berry

Please be sure and consult with your tax advisor about any of the above benefits.

Alison JensenApril 14, 2022