Owning a home often times means a larger amount back from your tax return at the end of the year. However, there are many tax breaks out there that most Americans do not take advantage of. Here are two tax breaks that are often times overlooked and missed out on on people’s’ taxes.
Making your Home More Environmentally Friendly
Not only can improving your home’s energy efficiency be beneficial to your monthly energy costs but they can also help you when you file your taxes. The upfront costs of these improvements may scare you away in the beginning but just remember the benefits you will be getting. If you installed new insulation, solar panels, dual-paned windows, or other appliances make sure you save or find those receipts, you will need them. These improvements can save you money on your local and federal tax returns at the end of the year. Make sure you also do a little research about any other eco-friendly breaks you may be able to take advantage of.
Getting a Tax Break from your Mortgage Interest
Many people state that claiming their mortgage interest and property taxes are one of the main reasons they decide to own a home over renting a home. However, only 63% of American homeowners are taking advantage of this break according to the American Institute for Economics Research. In order to get these breaks you must file an itemized tax return and meet the requirements that are stated. Some people may feel that this process is too long or that they will not meet the requirements and that is why that they choose not to file this way. But it is important to understand that this can make a difference financially over time even though it may be only a little increase each year. So if you are unsure either pay someone to prepare your taxes or take the time to do the itemized tax return – it may surprise you in the end.
Preparing your taxes may seem like an overwhelming process to some people but it is important that you consider where you can make the most money back at the end of the year. Be sure to put yourself in the best position by staying organized and saving receipts when making improvement to your home as you never know when those improvements can mean a tax break. If you are unsure, do some research or ask a professional to ensure you are getting the most back.