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    Are You Missing Out on Homeowner Tax Breaks?

    Are you a property owner looking for ways to reduce your annual tax burden? These homeowner tax incentives can help lower...

    • SAMANTHA KASPRZYK-BENGE
    • January 30th, 2023
    • 5 min read

    Are you a property owner looking for ways to reduce your annual tax burden? These homeowner tax incentives can help lower your taxable income and result in huge savings when filing. In this article, we’ll discuss the most common homeowner tax incentives that could benefit you this year.

    Homeowner tax breaks that will save you money

    The interest you paid on your mortgage

    For homeowners who itemize, the interest paid on your mortgage is usually a pretty hefty tax deduction. This amount depends on when you took out your loan: if it was after Dec. 16, 2017, you can deduct up to $750,000 (or up to $375,000 if married and filing separately); for loans taken out between Oct. 14, 1987, and Dec. 15, 2017, you can deduct up to $1 million ($500,000 if married and filing separately); and for refinanced mortgages, the limit depends on the origination date of your first loan. All interest may be deductible if your loan predates Oct. 14th, 1987.

    What you paid for discount points

    If you’re within the limit to deduct all your mortgage interest, you may also deduct the discount points you paid when the loan closed. Discount points can lower the mortgage's interest rate and cost 1% of the total mortgage amount. It is important to note that there are other types of fees called "loan origination points" which do not qualify for a deduction—instead, these go toward covering lenders' costs in providing loans.

    Some renovation costs—especially medically-necessary improvements

    When determining your medical expense deductions, you may include the cost of installing healthcare equipment or other medically-required home improvements that benefit you and your household. However, permanent improvements that increase the value of your home are only partially deductible; the amount must be subtracted from your increased property value. In contrast, many modifications that make a home more accessible (building entrance ramps, wide doorways, railings, and support bars) do not raise a property’s worth and can be fully deducted.

    Home office expenses

    If you’re self-employed and use part of your home regularly and exclusively for business purposes, you may be eligible to deduct home office expenses. The IRS website provides information on how to determine if your space qualifies for a tax deduction as well as worksheets for calculating the amount. You can choose either the "simplified method" or calculate your actual expenses when figuring out the deduction.

    Property taxes

    You may deduct a maximum of $10,000 ($5,000 if married and filing separately) for the combination of property taxes, state, and local income taxes, or sales taxes when filing your personal income taxes.

    What you need to know about multi-family residence deductions

    People who purchase and operate rental properties can take advantage of various tax deductions that differ from those available for a primary residence owned by the homeowner. 

    These include:

    Asset depreciation

    Depreciation is a unique tax benefit of rental property. According to the Internal Revenue Service (IRS), residential property has a depreciable lifespan of 27.5 years, while non-residential real estate has a depreciable lifespan of 39 years. This allowance is provided for expected wear and tear or obsolescence when owning the property over time. Furthermore, larger purchases like appliances or furniture may also be depreciated by owners over the item’s lifetime.

    Repairs

    Repairs to rental properties are generally deductible on tax returns. This includes fixing a broken banister or replacing a damaged garage door. However, upgrades and improvements such as adding a new shed or remodeling a bathroom are not considered repairs, but they can be depreciated over the useful life of the property. If you provide tenants with rental credits in exchange for performing repairs, this credit can also be deducted as an expense even though it will be considered income.

    Operating expenses

    Expenses related to tenant screening, such as background checks, credit reports, and reference checks are generally deductible. Other costs associated with the upkeep of the property or landlord-paid utilities may also be eligible for deduction. These expenses can include lawn care, painting, appliance maintenance and repairs, carpet cleaning, pest control, and seasonal maintenance (gutter cleanings, tree pruning, snow removal, etc.) as well as your Homeowners' Association dues.

    Is it worth the trouble to claim these tax breaks?

    For homeowners, tax deductions can amount to thousands of dollars. However, it is only worth itemizing if the sum of all your deductions exceeds the Internal Revenue Service's (IRS) standard deduction for the 2022 tax year. The standard deduction amounts are as follows: $25,900 for married couples filing jointly; $12,950 for single filers and married individuals filing separately; and $19,400 for heads of households.

    Looking for more tips?

    If you're uncertain of the steps to take or need advice tailored to your situation, our team is here for you. Our real estate agents are knowledgeable about the intricacies of our current market and can answer any questions you have.

    Get in touch

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    About the author

    SAMANTHA KASPRZYK-BENGE

    941.650.3732
    Samantha is a prominent figure in Sarasota’s luxury real estate scene. With more than 20 years of experience and over $325 million in sales, she’s recognized for her keen insight and strategic acumen. Renowned for her straightforward approach and analytical mindset, Samantha has established a track record of exceptional outcomes, helping her clients maximize their investments with integrity and unwavering commitment. For the past 20+ years, Samantha has been a trusted guide for clients seeking their ideal home in Sarasota’s stunning landscape, from beachfront properties to cultural hotspots. Her honest, direct approach and deep understanding of her clients’ needs have built a loyal base of repeat clients and strong connections with Sarasota’s most respected real estate professionals. Samantha’s attention to detail and commitment to her sellers ensure that every property reaches its full market potential. Her ability to seamlessly navigate complex transactions, combined with her strategic thinking and dedication, has earned her the highest regard in the industry. A graduate of the University of Wisconsin-Oshkosh with a degree in Business Administration, Samantha's midwestern values and strong work ethic are at the core of her success. Beyond her career, Samantha is passionate about Sarasota’s cultural and natural beauty. When she’s not working, she enjoys spending time by the Gulf of Mexico with her daughter, Isla, embracing the “salt-life” that so many of her clients desire. Partnering with Keith Redding under William Raveis, Samantha continues to deliver exceptional results as part of the leading family-owned real estate firm along the Suncoast.

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    Benge Redding Luxury Specialists

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    6021 Midnight Pass Rd., Sarasota, FL 34242

    Call Us:

    941.650.3732

    Message Us:

    [email protected]

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