Things To Claim As Tax Deductions As A Home Owner

Owning a home is a significant milestone, but it also comes with various financial responsibilities. One of the benefits, however, is the array of tax deductions available to homeowners and real estate investors. Understanding these deductions can help you save money and maximize your investment returns. Here are some key tax deductions to take advantage of as a homeowner and investor.

### Mortgage Interest Deduction

One of the most substantial tax breaks available to homeowners is the mortgage interest deduction. If you have a mortgage on your home, you can deduct the interest paid on loans up to $750,000 (or $1 million if you bought the home before December 15, 2017). This deduction applies to both primary and secondary homes, making it especially beneficial for those who own multiple properties.

### Property Taxes

Another significant deduction is property taxes. Homeowners can deduct state and local property taxes up to $10,000 per year ($5,000 if married filing separately). This deduction can be a substantial relief, particularly in states with high property taxes. Keep in mind that this limit includes all state and local taxes combined.

### Home Office Deduction

For those who work from home, the home office deduction can provide additional tax savings. To qualify, you must use part of your home exclusively and regularly for business purposes. The deduction can cover a portion of your mortgage interest, property taxes, utilities, repairs, and depreciation.

### Real Estate Investment Deductions

If you're investing in real estate, several additional deductions can help reduce your taxable income. These include:

#### Depreciation

Real estate investors can deduct depreciation on their rental properties. Depreciation allows you to write off the cost of the property over its useful life (27.5 years for residential properties). This non-cash deduction can significantly reduce your taxable income while preserving cash flow.

#### Repairs and Maintenance

Costs associated with repairs and maintenance on rental properties are fully deductible in the year they are incurred. This includes expenses like fixing a leaky roof or replacing a broken appliance. However, improvements that add value or extend the property's life must be capitalized and depreciated over time.

#### Travel Expenses

If you travel to manage your rental properties, those expenses may be deductible. This includes mileage for driving to and from your properties as well as airfare and lodging if your properties are out of town. Keeping detailed records of these expenses is crucial for claiming this deduction.

#### Legal and Professional Fees

Fees paid to attorneys, accountants, property management companies, and other professionals involved in managing your real estate investments are deductible. These costs can add up quickly, so make sure to keep track of them throughout the year.

### Energy-Efficient Home Improvements

Homeowners who make energy-efficient improvements may qualify for tax credits rather than deductions. The Residential Energy Efficient Property Credit covers 26% of the cost of installing solar panels or other renewable energy sources through 2022 (then it decreases incrementally). Additionally, smaller credits are available for other energy-efficient upgrades like windows and insulation.

### Conclusion

Navigating the world of tax deductions as a homeowner or real estate investor can be complex but highly rewarding. By taking advantage of these deductions—mortgage interest, property taxes, home office expenses, depreciation on rental properties, repair costs, travel expenses related to property management, legal fees, and energy-efficient improvements—you can significantly reduce your taxable income.

Always consult with a tax professional to ensure you're maximizing your deductions while staying compliant with IRS regulations. With careful planning and record-keeping, you can make homeownership and real estate investing even more financially advantageous.

**I am not a financial advisor.