Tax Season can be Kinder

By Kind Staff
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Tax Season can be Kinder

Spring is vibrant, and summer is fun.  But tax season could be the Kindest of them all.  As a homeowner, you may qualify for numerous tax deductions *, which means money back in your tax return.  And who wouldn’t want to have that?! Uncle Sam is hooking homeowners up with a variety of potential deductions.  These tax deductions can vary across home improvement expenses, insurance payments, claims on the house, and whether you’re a first-time homebuyer.  Let’s break down the ways tax season can be a whole lot Kinder thanks to homeownership.

Home Improvement Expenses

Channel your inner Bob Villa.  Did you know that some home improvements can be deductible on your taxes? * Check out some options for upgrades to your home that can save you some green (& make those new neighbors green with envy):

  • Capital Improvements - Splash into savings on your taxes with capital improvements like adding a swimming pool or replacing your roof.  Keep in mind that home repairs are not tax deductible.
  • Medically Necessary - Modifications to your home for medical necessity, like ramps or handrails, can be tax deductible.  The maintenance of such items are also deductible.
  • Energy-efficient Equipment - Save on power, save on taxes.  Some energy-efficient appliances may earn you a credit on your taxes through the Energy Star program.  Act quickly as the benefits are set to expire!

Mortgage Interest Deduction

The interest paid towards your home loan can be counted in an itemized deduction.  Currently the mortgage interest deduction stands at $750,000 for homes you’ve bought, built, or sought financing for home improvements. You’ll want to check in with a tax professional to determine if the standard deductions or itemized deductions will save you more.

Property Tax Deduction

As a homeowner, you’ll pay both state and federal property taxes. “Score! I get to pay more taxes,” said no one ever. The silver lining is that these taxes may be deductible.  For itemized deductions, the maximum you can claim is $10,000 (or $5,00 if you’re married and filing separately).  If you’re opting for standard deductions, the amount adjusts with inflation.  You’ll receive a statement from the government biannually, so make sure to keep that for tax time.  Those who pay through an escrow account will likely receive a 1098 statement listing the amount paid.

Insurance Payments

At times, lenders will require Private Mortgage Insurance, or PMI, to be added to monthly payments as a protection in case the borrower were unable to pay their mortgage payment.  For example, if a borrower doesn’t have a 20% down payment, PMI may be required.  If you’re opting to itemize, you may include your PMI payments on your annual taxes. (Note: PMI tax deductibility for 2022 and beyond has not been extended as of 07/01/2022, but historically it gets extended every year.)

Tax Breaks for First-Time Homebuyers

Uncle Sam wants you…to get into a home.  Additional incentives are available for first-time homebuyers.  For example, the IRS allows a $10,000 deduction from your traditional or Roth IRA account to finance your first home without paying the 10% penalty, however you will still have to pay regular income tax on the withdrawal.  Additional government agencies offer incentives for first-time homebuyers.

Want to know more about qualifying for tax incentive programs and the numerous benefits of homeownership?  Stop the scrolling and connect with a knowledgeable Kind Ambassador to discuss your unique goals and situation.  Make next tax season Kinder with the numerous tax deductions available to you as a homeowner.

*References to tax deductibility are based on generally available information and are not proposed as expert tax or legal advice. Each consumer’s situation is different. You should consult a professional tax or investment adviser for advice based on your particular financial situation before making any final decision based on the information contained herein.