Tax season is here and, as a homeowner, there are a few things you need to know. If you’ve kept up with the news, you know there are some things that have changed with the tax code. These changes aren’t applicable to the tax return you are (or should be) in the process of preparing before Tax Day 2018. Since you’ll be preparing your tax return for 2017, there are some important tax breaks you should keep in mind before they’re gone.
The new laws limit the state and local tax deduction beginning in 2018 to a max of $10,000. If you paid more than that this past year, including any prepayments, you can still deduct the full amount! Make sure you’re taking advantage of this deduction to the fullest before the new code takes effect next year.
Mortgage Loan Interest-
The limit from which you can deduct your home loan interest is changing for the 2018 tax year. The former $1 million limit is reducing to $750,000. Your 2017 returns, though, will still fall under the old rule. If you have interest on a home loan that’s up to $1 million, you can and should still deduct it when filing your 2017 taxes.
Home Equity Loan Interest-
You are able to deduct the interest you paid on a home equity loan as well. That means you could deduct on a home equity loan up to $100,000 if you’re married and choose to file jointly. This perk will be going away when you file your 2018 taxes next April and it won’t be grandfathered in like some other tax incentives for loans.
Do you work from home? There are significant deductions you can claim when filing your taxes. The rules are that you have to conduct all your business from this space and it has to be a set-apart area of your home. Research the best ways to calculate that deduction before filing. One well-known way is to calculate $5 per square foot of office space up to a maximum of 300 square feet. In that scenario, if your office is 250 square feet, then you can claim $1250. But be sure to compare other methods of calculation to ensure you’re using the best formula for your situation.
Although some things are changing in regards to home ownership and tax breaks, it doesn’t mean you shouldn’t capitalize on these benefits before they’re gone. A bit of research and knowledge of 2017’s deductions can help your bottom line tremendously this year.