5 Tax Benefits of Owning a Home: A Complete Guide for Filing This Year
You may remember that during the height of the COVID-19 pandemic, the Internal Revenue Service delayed filing season by about two weeks. But just like last year, there are no extensions and the date for filing is April 18, 2023. (According to the IRS, “The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2023, to file their returns due to the Patriots’ Day holiday in those states.”)
Why it’s important: The ability to deduct the interest on a mortgage continues to be a significant benefit of owning a home. And the more recent your mortgage, the greater your tax savings.
Good news for all self-employed people whose home office is the principal place where they work: You can deduct $5 per square foot, up to 300 square feet, of office space, which amounts to a maximum deduction of $1,500 Does Not apply t0 w-2 working remotely.
If you have a home equity line of credit, or HELOC, the interest you pay on that loan is deductible only if that loan is used specifically to “buy, build, or improve a property”.
This deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are.
Qualifying solar electric panels and solar water heaters are good for a credit of up to 30% of the cost of the equipment and installation. You can also nab an energy efficient home improvement lifetime credit of a $500 for improvements made to your home through December 31, 2022. Energy-efficient upgrades include things like exterior windows, doors and skylights, insulation, and the cost of home energy audits. Here’s some more good news, the IRA passed an extension and expansion of the credit, so starting January 1, 2023, the amended credit will be worth up to $1,200 per year for a qualifying property.