If you’re playing the tax game of making changes to decrease what you owe each year while maximizing your tax return then you are not alone. Nearly everyone wants to pay less and get more. It can be overwhelming at times to know what tax breaks you are eligible for when our tax code has over 70,000 pages.
When it comes to tax breaks for being a home owner here are 3 you don’t want to miss.
- Mortgage interest
As a homeowner along the Jersey Shore, you are eligible to deduct the interest you pay on your mortgage each year. However, to be eligible for the tax break you must itemize your deductions. Only 63% of homeowner do this according to recent research by the American Institute for Economic Research. Some homeowners find that their income tax liability is so minimal that itemizing is not worth it and taking the standard deduction is more beneficial than a tax break If you are a homeowner who meets the criteria to itemize your deductions do so. It doesn’t add up to take a standard deduction when your itemized deductions are higher.
- Green home tax breaks
If you have made changes in your home to make it more energy efficient then you may be eligible for tax breaks. In New Jersey you can take advantage of the Home Performance with Energy Star and receive up to $4,000 in incentives. Check with your local municipality as well to see if they offer any additional tax breaks for energy efficient improvements.
- Cancellation of debt
If you went through a foreclosure, short sale, or even a deed in lieu of foreclosure, the mortgage debt that was forgiven on your behalf will be assigned as income to you. This is known as cancellation of debt (COD). As a result of the 2007 Mortgage Debt Forgiveness Relief Act, you may be exempt from COD. Check with your tax professional.
Jersey Shore homeownership provides you with numerous advantages with some of those being tax advantages. If you are looking to buy a home along the Jersey Shore this spring we are here to help. Contact us today via email or give us a call directly at (609) 399-5454, we are here to help you with all your real estate needs.