Essential Tax Deductions For Homeowners Filing Their 2022 Taxes
By April 18, 2023, most Americans will need to have filed their income taxes for the 2022 filing year. It's often a time of year that comes with some dread, as well as a bit of scrounging to find receipts that could help you save money. Owning a home could lower your tax obligations if you know which tax deductions are available that fit your situation. The most significant update to taxes in over 30 years occurred with the Tax Cuts and Jobs Act that went into place in 2018, per Realtor.com, and it could have an impact on your taxes this year.
It's always wise to work with an accountant who can provide you with more insight into the ways to save money and which tax deductions you qualify for, but even if you file your own taxes this year you can still take eligible deductions. For many taxpayers, the following are some of the most notable and significant tax savings in regard to owning a home for this year. Don't overlook the importance of taking any tax benefits you qualify for, as that's money you can put back into your home or use any other way you'd like.
Save money on mortgage interest and taxes paid
If you have a mortgage loan, you're probably paying interest, the cost of borrowing money with each payment you make. The home mortgage interest deduction is one of the most significant for homeowners. You can deduct the amount you spent on mortgage interest on the first $750,000 of your debt or $375,000 if married filing jointly provided the loan began after December 16th, 2017. Prior to that, you can claim interest on debts up to $1 million. Keep in mind that you cannot deduct mortgage insurance premiums. Furthermore, you can only deduct mortgage equity loan interest if you used the funds to directly buy, build, or improve your home, not to consolidate debt or take a vacation.
Did you pay property taxes in 2022 on your home? You may be able to deduct as much as $10,000 from your taxes each year or $5,000 if married filing separately. If you plan to take the standard tax deduction, you may not be able to claim property taxes separately. However, if you plan to itemize your taxes instead of taking the standard deduction for this year, a property tax deduction could lower your financial obligation.
Other ways to save on your taxes for 2022
How you use your home and the investments you've put into it could prove to be tax savings opportunities. For some, the investment in solar electric panels, solar water heaters, or other qualified clean energy options could help reduce your tax obligations. Though the IRS has a number of restrictions, many people will see this as a nice way to lower taxes and do something good for the environment.
You may be able to reduce some of your tax obligations if you made substantial improvements to your home in order to allow you to age in place, for example, installing a wheelchair ramp or lowering cabinetry to meet your needs. Provided the amount you spent was more than 7.5% of your adjusted gross income, this could lead to a tax deduction. You'll need a note from your doctor showing your qualification here.
For those that are self-employed and working from home, a home office tax deduction could help bring down your bill. To qualify, the office must be solely dedicated to your business and must be the principal place you operate. If that's the case, you may be able to deduct the costs of managing that space, such as a portion of the rent or mortgage, insurance, utilities, and other costs, or take the standard deduction of $5 per square foot. There's a maximum of 300 square feet allowable, reaching up to $1,500 in savings.