As tax season rolls around, it's essential to understand the unique benefits and responsibilities that come with homeownership, especially regarding your taxes. This guide provides an overview of deductions and credits that homeowners may be eligible for. The IRS Publication 530 is detailed resource on Tax Information for Homeowners, but here is a highlight of what you’ll find:

Understanding Homeownership and Taxes

Homeownership can affect your taxes in several ways, offering various deductions and credits to potentially reduce your tax bill.

Key Tax Deductions for Homeowners

  • Mortgage Interest Deduction: You can deduct interest on up to $750,000 of mortgage debt for loans taken out after December 15, 2017. For loans before this date, the limit is $1 million.1 
  • Property Tax Deduction: You can deduct up to $10,000 ($5,000 if married filing separately) of your property taxes.2
  • Home Office Deduction: If you use a portion of your home exclusively for business, you may be able to deduct a portion of your home expenses such as mortgage interest, insurance, utilities, repairs, and depreciation.3

Credits for Energy-Efficient Upgrades

  • Energy Efficient Home Improvement Credit: If you make qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through 2032. To qualify, home improvements must meet energy efficiency standards, be new systems and materials, not used, and meet specific credit limits.4

Selling Your Home and Taxes

Profit from your home sale might be tax-free up to $250,000 for single filers and $500,000 for married couples, IRS Publication 523 provides the detailed rules.5

By understanding the tax benefits associated with homeownership, you can make more informed decisions and potentially save money. Remember, consulting with a tax professional is the best way to ensure you’re taking advantage of all available benefits.

Disclaimer: Please note, this guide is for general informational purposes only. BLC Community Bank does not provide tax, legal, or accounting advice. For personalized tax advice, consult your own tax, legal, and accounting advisors before engaging in any transaction or visit the Internal Revenue Service (IRS) website. The information included in this article is accurate as of 4/8/2024.

1 IRS Topic No. 505
2 IRS Publication 530
3 IRS Home Office Deduction
4 IRS Energy Incentives
5 IRS Topic No. 701