Maximize Your Tax Refund: How Homeownership Can Save You Money

Owning a home in America is becoming pricier, but it also has tax benefits. Homeowners spend $12,904 annually on home expenses, according to Angi, excluding taxes and mortgage payments. Knowing all possible tax breaks can maximize tax refunds when filing 2022 taxes.

Mortgage interest is the top tax deduction for homeowners. It’s the most profitable for new homeowners, as they generally pay more interest during the initial years of their mortgage.

Joint filers can deduct payments for interest on loans up to $1 million, while single filers can deduct half that amount. To deduct mortgage interest, complete Form 1098 from your lender and enter the amount on Line 8 of 1040 Schedule A.

Mortgage points, or discount points, can also be deducted as prepaid interest. They can reduce interest rates and save money on taxes

New homeowners may be eligible for a Mortgage Credit Certificate that can provide a tax credit on their mortgage interest payments.

Property taxes can be deducted up to a limit of $10,000, and home office expenses can be claimed if you use part of your home exclusively for business. Additionally, installing an electric vehicle charging station can get you a tax credit of up to 30% of the cost.

Make your home energy-efficient to receive tax credits for improvements like solar power and geothermal heat pumps. Interest from home equity loans can be deducted if used to improve the home.

When selling your home, you may receive a large tax exclusion if you lived in the home for two of the previous five years. Home improvements for medical needs can also be deducted if they exceed 7.5% of your adjusted gross income. Keep all receipts and invoices for tax purposes.