Blog Post

Are you missing out on these tax breaks?

heritagerealestate • Mar 08, 2019

Are you maximizing all the tax benefits available to you as a homeowner?

Staying up-to-date on the latest tax rules is a smart move if you’re interested in keeping more money in your pocket, but with the recent changes from the Tax Cuts and Jobs Act, you might be a little fuzzy on exactly which credits and deductions you can take advantage of. Whether you’re a long-time homeowner or just bought your very first home, it helps to have a refresher. Let’s brush up on some of the key tax perks of homeownership, so you can make the most of your benefits this tax season.

Mortgage Interest Deduction
If you took out your mortgage after Dec. 15, 2017, the interest you pay on your first or second mortgage is generally tax deductible on home loans up to $750,000 (or $375,000 if married filing separately). For mortgages taken out on or before Dec. 15, 2017, the deduction applies to home loans up to $1 million (or $500,000 if married filing separately). If you took out a home equity loan or line of credit, the interest is only tax deductible if the loan was used to buy, build, or substantially improve the home that secures the loan. Exceptions, limitations, and restrictions apply, so talk to your tax advisor to see if you’re eligible for the mortgage interest deduction. 2 Mortgage Interest Credit
This helps low- to moderate-income people afford homeownership by providing a credit of up to $2,000 on mortgage interest paid in a calendar year. Eligible taxpayers must obtain a Mortgage Credit Certificate (MCC) prior to purchasing their home. The MCC must be issued by a state or local governmental unit or agency under a qualified mortgage credit certificate program. 3 Mortgage Discount Points Deduction
Mortgage Discount Points are something you can purchase to lower your interest rate when you buy your home; one point is typically equal to 1% of the loan amount. If you purchased discount points when you bought your home, you may be able to deduct them on your income tax return. Of course, the IRS has eligibility requirements for deducting points, so talk to your tax advisor to see if you qualify for this deduction. 4

Property Tax Deduction
State and local property taxes that you pay for any real estate you own are deductible up to $10,000 (or $5,000 if married, filing separately). Keep in mind the deduction limit is applied to your overall property tax payments, even if you own more than one property. For instance, if you own two or more properties and your total combined property tax bill was $15,000, you will only be allowed to deduct $10,000 total from your income taxes. 2

Capital Gains Tax Exemption
If you sell certain types of assets for more than their original cost, you may have a capital gain. Capital gains are normally taxable. However, an exception is made if you sell your home for more than the amount you paid (in other words, if you make a profit). The capital gains you get from selling your home are tax-free up to $250,000 (or $500,000 if married filing jointly). The caveat is that you must have lived in that property as your primary residence for two out of the past five years. This tax perk helps you keep more of the equity that you worked to build over the years — yet another example of just how powerful equity can be for growing your wealth. 5

Energy Tax Credits
Interested in making your home more energy-efficient? The federal government offers the residential energy efficient property credit for installing alternative-energy equipment in your primary or secondary residence. This includes qualified solar electricity and water heating, small wind energy, fuel cell, and geothermal heat pump systems. The credit is up to 30% of the cost for purchasing and installing these systems in 2018. 6

Being a homeowner comes with some pretty fantastic advantages, and tax breaks are one of the benefits you don’t want to miss out on. Talk to your tax advisor to learn more about how you can max out your tax savings and get the most from your real estate investment.
Want to learn more about the benefits of owning a home?
Let’s set up a time to talk!

*This information is not intended to be a comprehensive or exhaustive list, nor is it intended to be a substitute for expert advice from a professional tax advisor or preparer, or the Internal Revenue Service (IRS). Centier Bank and its loan officers are not tax preparers or advisors. Consult a tax professional for more information.

[1] IRS.gov, “Credits and Deductions for Individuals,” November 2018.
[2] IRS Publication 5307, “Tax Reform Basics for Individuals and Families,” Tax Year 2018.
[3] IRS Form 8396, “Mortgage Interest Credit,” 2018.
[4] IRS Topic Number 504 – Home Mortgage Points, January 2018.
[5] IRS Topic Number 701 – Sale of Your Home, February 2018.
[6] IRS 2018 Instructions for Form 5695.

Share this article:

Facebook   Twitter   LinkedIn
Jason Harris Photo Jason Harris
NMLS# 416892
Centier Bank
600 E 84th Avenue
Merrillville, IN 46410
219.938.0429
EMAIL ME
Visit my website
Centier Bank Logo

Share this post

03 Jan, 2023
Airbnb’s platform usually has two updates each year. One in the Summer and one in the Winter. This year’s Winter update came with a lot of cool features, like a much-needed button that allows potential guests to see the total price for their stay with all the fees included.  However, one piece of news was rolled out that I don’t believe enough people are talking about. Airbnb will now allow renters who live in apartment complexes to rent out their units . Many of these units are located in large cities, where the STR industry faces the stiffest regulations.
By heritagerealestate 24 Apr, 2019
In addition to taking precautions to prevent a fire or having alarms to catch one early, you should consider using a fireproof safe to store your important documents and keepsakes. Here are just a few things you may consider keeping in one: 1. Identification documents — birth certificates, passports, marriage license, a copy of your driver’s license and vehicle registrations, and power-of-attorney documents. 2. Other personal papers — college transcripts and diplomas, financial documents, wills, and a list of other final wishes. 3. Property documents — home deeds, rental agreements, and car titles. 4. Insurance documents — Your policies, in addition to documentation of your home and personal items that are covered. Receipts for valuable items should be kept as well. 5. Cash and valuables — While it’s rarely wise to keep a large amount of money in your home, an emergency stash could be helpful. Keepsakes that cannot be replaced should be secured too. While fireproof safes are very effective, they are not completely indestructible. You should also consider keeping an electronic backup of important photos and documents. A safe deposit box is another option for storing items, but keep in mind that only you or anyone you designate can access it, and they are not accessible 24 hours a day. There is also a monthly rental fee involved. Fireproof safes range in price and size. It’s best to determine what you plan to store in yours and where in your home you plan to put it to determine the one that is right for you.
By heritagerealestate 08 Apr, 2019
About you — Do you have kids or pets? Spills and accidents are not as easily cleaned from carpet. With that said, there are a lot of carpets that offer extra protection for preventing stains. A darker color would probably be a good choice too.
By heritagerealestate 22 Mar, 2019
Large appliances can be quite costly, and unless they’re purchased as part of a renovation, most people aren’t really excited about having to replace them. Here are some things you can do to extend their life. Dishwashers — Load properly so that items don’t fall through and damage parts. Running an unloaded dishwasher occasionally with a cup of white vinegar on the top shelf will help to keep your unit clean and odor-free. Periodically clean your dishwasher trap (under the lower spray) to remove any remnants. Regularly check and clean the seal around the door. A broken seal can lead to an expensive mess. Refrigerators — Clean the coils a couple times a year. A dirty coil causes the compressor to work harder and can shorten the life of your appliance. It could also lead to a higher utility bill. Be sure to unplug your refrigerator when you do this, just remember to plug it back in! Ranges — If you have a smooth top, don’t drag pots and pans from one burner to another. For those stoves with burners, be sure to regularly clean and remove items that fall through. Keep your oven clean either by using the self-cleaning option or manually cleaning it. Washers — While it’s tempting to get as much laundry as you can into a load, it’s not good for your washer. Also ensure that your washer is level to avoid excessive vibration. Follow instructions for the type and amount of detergent that is best for your unit, and leave it open when it is not in use to prevent mildew. Dryers — It’s important to clean the lint filter after every load to keep air flowing freely. You should also have your duct cleaned annually to prevent it from clogging (which is a fire hazard). All appliances are a little different, and you should check your owner’s manual for specific tips on how to care for yours. With a little care, you can usually avoid costly repairs and a need for premature replacements.
By heritagerealestate 05 Feb, 2019
We all like having additional peace of mind when it comes to the systems and appliances in our homes. Things inevitably break down over time, but most of us don’t plan for the furnace to die mid-winter or for the dishwasher to suddenly implode. A home warranty can offer some financial protection for those unexpected occurrences. February 10 is National Home Warranty Day, which means it’s the perfect time to explore whether a home warranty is right for you. The answer depends on the state of your appliances and system components, how much you’re willing or able to pay out of pocket for repairs or replacements, and how much reassurance you’ll get from having this coverage.
Show More
Share by: