There are many different home-related expenses you can deduct from your taxable income – which is awesome news for homeowners! Be sure to retain the information necessary for the recommended time frame to claim these tax deductions.
To help you out, we scoured the IRS website to gather the tax deductible and non-tax-deductible expenses you may want to consider when filing your tax return this year.
Which tax deductions can I claim related to the costs of purchasing a home?
According to the IRS, you may claim the following expenses on your tax return if you itemize your deductions:
- Home mortgage interest payments – (usually reported on Form 1098) on your primary residence, as well as on a secondary residence (there are limits, but relatively few taxpayers are affected)
- Property taxes – if you purchased your home this year, don’t forget to include any taxes you may have reimbursed the seller for (these are taxes the seller had already paid before you took ownership; you won’t get a 1098 report listing these taxes, but the amount will be shown on the settlement sheet)
- Real estate taxes
- Mortgage points – points you paid (or those you negotiated for the seller to pay for you) when you purchased your home; each point is equal to one percentage of the loan amount
Which home-related expenses can I deduct if I sold my home this year?
The following expenses (that cannot be deducted until you sell your home) may potentially lower your tax obligation, per the IRS, if you sold your home this year:
- Replacing the roof
- Installing central air conditioning
- Adding an extension (like a sunroom)
- Adding a swimming pool
- Making certain energy-saving home improvements
- Moving expenses – if you sold your house in conjunction with moving for a new job, your moving expenses may be deductible; there are some rules to this deduction (e.g., your new home must be at least 50 miles closer to your new job than your old home was), so be sure to consult your tax advisor
Home tax expenses are not limited to big-ticket items, though. Adding an extra water heater counts, as does adding storm windows, an intercom, or a home security system.
All records should be kept for future use, since any home improvement costs can add up over the years.
What are additional deductible home expenses and home tax deductions?
You may be able to claim tax deductions for the following expenses:
- Refinancing a home
- Accidental loss
- Home office
- Ongoing tax breaks
- Home improvements required for medical care
Which home-related expenses cannot be deducted?
The IRS says the following expenses cannot be claimed as tax deductions:
- Fire, flood, or homeowner insurance payments
- Appraisal fees for your home
- Amounts paid to reduce your mortgage principal
- General cost of home improvement and maintenance expenses, except in the relatively rare case where there is a qualified medical expense
- Mortgage insurance premium payments
- Dues to a homeowner’s association
Of course, every situation is unique. To learn which deductions apply to you, be sure to consult a qualified tax advisor. This list should give you a start, and hopefully put you on the right path to discovering all the deductions you may be eligible to claim as a homeowner.
Not providing legal advice. Consult a tax adviser for more information.