If you recently bought a house in Houston, chances are that to get the most out of your tax exemptions, your taxes might become pretty complicated. While the below is a list of tax benefits we know of for 2014 first-time home buyers, you should always try to find out any tax credit updates by talking to a tax professional.
Mortgage interest paid can be deducted on taxes
The mortgage interest you pay to a lender is tax deductible, and this deduction counts for a lot since new homeowners actually pay more interest than principal in the first 10 years of a 30 year mortgage.
Interest deductions extend to second mortgages, refinances, home equity loans and home equity lines of credit as well.
You can also deduct your local property taxes for the taxes you paid for the previous year. For example, if I bought a house in June 2014, then I can include my taxes from June-December when I file in 2015.
You can deduct up to 10% of the cost of any improvements made to a home for energy efficiency. A few examples include:
- Biomass stoves
- Advanced main air circulating fan for A/C
- Geothermal heat pumps
- Small wind turbines
- Solar energy systems
Certain home improvements
Most home improvemetns will not be tax deductible, but some are. In order for an improvement to become a tax benefit for you, it must be a “major” improvement that significantly increases the value of your home. For example:
- Adding a room, garage, deck or paved driveway
- Installing or upgrading central air or heating
- Adding a built in pool or gazebo
- Making your home fully handicapped accessible
- For more: click here.
Costs for maintaining a home office
The IRS states that for a home office to qualify for tax deductions:
You must regularly use part of your home exclusively for conducting business and you must show that you use your home as your principal place of business.
Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Tax laws change frequently, so work with someone to prepare your taxes.