Owning a home or investment property can come with a variety of tax benefits, including deductions and credits that can help reduce your overall tax liability. In addition to common deductions such as standard or itemized deductions, mortgage interest, and property tax deductions, there are several real estate-specific deductions that homeowners and investors should be aware of. These deductions can help offset the cost of owning a property and provide financial relief during tax season.
Here is a list of some of the real estate-specific deductions that you may be able to take advantage of when filing your taxes in 2023.
  1. Standard deduction or itemized deductions
  2. Mortgage interest deduction
  3. Property tax deduction
  4. State and local income tax deduction
  5. Charitable contributions deduction
  6. Medical and dental expenses deduction
  7. Educator expenses deduction
  8. Student loan interest deduction
  9. Retirement contributions deduction
  10. Home office deduction
  11. Child and dependent care credit
  12. Earned income tax credit
  13. Lifetime learning credit
  14. American Opportunity Tax Credit
  15. Health savings account (HSA) contributions deduction
  16. Moving expenses deduction (for members of the military only)
  17. Casualty and theft losses deduction
  18. Job search expenses deduction (if you’re looking for a new job in the same field)
  19. Self-employment expenses deduction (if you’re self-employed)
  20. Capital losses deduction.
Here are a few real estate-specific deductions you want to make sure you consider:
  1. Home mortgage points deduction: If you paid points on your home mortgage when you purchased your primary residence, you may be able to deduct those points as mortgage interest.
  2. Rental property expenses deduction: If you own rental property, you can deduct expenses related to the property, such as mortgage interest, property taxes, insurance, repairs, and maintenance.
  3. Home energy efficiency improvements deduction: If you made energy efficiency improvements to your home, such as adding insulation, upgrading windows, or installing a solar system, you may be eligible for a tax credit or deduction.
  4. Real estate tax breaks for investors: Real estate investors may be able to take advantage of several tax breaks, such as depreciation deductions, Section 1031 exchanges, and the pass-through deduction for qualified business income.
It’s important to note that not all of these deductions may be applicable to everyone’s tax situation, and some deductions may have limitations or requirements that must be met in order to qualify. It’s a good idea to consult with a tax professional or use tax preparation software to ensure that you are taking advantage of all available deductions and credits.
Understanding the various tax deductions that are available to homeowners and investors can help reduce your tax burden and potentially increase your refund. Some of the most common real estate-specific deductions include home mortgage points, rental property expenses, and home energy efficiency improvements, as well as tax breaks for real estate investors. While these deductions can be complex and subject to limitations, requirements, and restrictions, seeking the guidance of a tax professional or using tax preparation software can help ensure that you are taking full advantage of all available deductions and credits. By being aware of these deductions and taking steps to qualify for them, you can maximize your tax savings and enjoy the benefits of owning real estate.
If you’re planning to purchase property this year or you’re interested in staying on top of opportunities to refinance, schedule a call with us below. We’d love to learn more about you and how we can support you on your real estate journey.
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