Given an opportunity, nobody can turn down the opportunity of living a somewhat luxurious life. But you don’t have to wait for the opportunity to come knocking at your door. If you are determined, you could start living like a prince even if you are on a pauper’s budget.
To most people, a home is the single most expensive investment of their lives and can leave quite a dent in your finances. So, if you are looking to free up some of your money, your mortgage is one of the places you want to look at.
This article highlights some tax breaks that you could use to increase your equity on a home to live as a prince on a pauper’s budget.
Take Advantage of Tax Breaks for Homeowners
There are quite a good number of tax breaks that you could enjoy as a homeowner and a real estate business owner. While no single tax break will be significant, taking advantage of all possible tax breaks can see you saving hundreds or even thousands of dollars annually.
To take full advantage of real estate agent tax deductions, you may want to talk to a tax expert from a reputable company like Keeper Tax to help you lower your tax bill allowing you to channel the saved revenue to other purposes like paying extra installments for your mortgage and thus improving the equity to your home.
Below is a list of some tax breaks you could enjoy as a homeowner.
Mortgage Interest Deductions
A mortgage interest deduction allows homeowners to deduct the interest they pay on their mortgage from their taxable income. This can translate into significant savings for homeowners, especially those with high-interest loans.
However, there are some restrictions on who can claim the deduction and how much they can deduct. For example, the deduction is only available for primary residences, and the amount that can be deducted is capped at $750,000 if you are single or filing your returns jointly with a partner if you are married.
If you are a married couple filing their taxes separately, each party has a $375,000 deductible limit. Nevertheless, the mortgage interest deduction can be a valuable tax break for eligible homeowners and can save you some money enough to indulge in a little luxury.
Necessary Home Improvements Tax Deductions
Making necessary home improvements can be a great way to increase your home's equity. However, knowing which improvements are tax-deductible is important to maximize your savings.
Some common deductible improvements include installing energy-efficient appliances, adding insulation, and upgrading your HVAC system. You only deduct the cost of the improvements, not the value of your home. So, if you're planning on making home improvements, keep track of your expenses to get the most out of your tax deduction.
Also, unnecessary home improvements may not qualify for tax deductions. For example, if you tear down a perfectly working kitchen because you want a better one, such costs may not qualify for a deduction.
Property Tax Deductions
Property taxes can be a significant expense, but there are ways to minimize their impact. One way is to take advantage of deductions and exemptions that may be available.
For example, you can deduct up to $10,000 of your property taxes on your federal taxes if you're married. If you're single or married, by filling your tax returns individually, you can deduct up to $5,000. Additionally, many states offer additional deductions for property taxes, so check with your local government to see what's available.
By taking advantage of the tax breaks, you can free your money which could add up to quite some savings that can make a huge difference in your finances and allow you a little luxury on a budget.