4 Tax Breaks Every Homeowner Needs To Know

Being a homeowner is pretty cool. You've finally found a place to call home and you're building equity; but did you know that owning a home comes with tax breaks? There are now tax deductions available to you as a homeowner that will reduce your tax bill substantially. Here are some tax breaks that might be available to you:

1. Mortgage interest. The biggest tax break that might be available to you is deducting your mortgage interest. For tax years prior to 2018, you can deduct interest on up to $1 million of debt used to acquire or improve your home. Be on the lookout for a 1098 document from your lender that will list the mortgage interest you paid during the previous year. If you are in the 25% tax bracket, deducting the interest basically means Uncle Sam is paying 25% of it for you.
2. Local property taxes.The amount you've paid in property taxes over the year will also show on the same form sent by your lender, if you paid your taxes through an escrow account. If you paid directly to the municipality, you'll need to check your records or your checkbook registry. Make note that you can only deduct the actual real estate taxes paid out during the year, not payments made into your escrow account.
3. Home improvements. Make sure you save your receipts for all the home improvements you've done while living in your house. While these don't count as tax credits now, when you go to sell your home the cost of these improvements will be added to the purchase price to determine the cost basis in your home for tax purposes. Keeping track of your home improvement projects will help limit the potential tax bill.
4. Energy credits. If you've made energy-saving home improvements you can earn an additional tax break in the form of an energy tax credit worth up to $500. This credit is actually better for you because it reduces your tax bill dollar-for-dollar. You can get a credit for up to 10% of the cost of qualifying energy-efficient skylights, outside doors and windows, insulation systems, and roofs, as well as central AC units, heat pumps, furnaces, water heaters, and water boilers. If you have solar-powered generators and water heaters, you could qualify for a separate credit equal to 30% of the cost. Read on to learn about more tax deductions that might be available to you. We've partnered with TurboTax to help you take advantage of the money-saving deductions that are available to you as a homeowner. Plus, you can save up to $15 on TurboTax federal products just for being a credit union member! Try TurboTax for free today.