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Money SmartsJanuary 16, 2019
While owning a home has its benefits, most homeowners will agree that their mortgage is a hefty expense to pay every month. To lessen the monthly burden of a mortgage payment, here are four tax deductions for which you may qualify that you might not know about.
1. Medical home improvements
Per Dan Connors, a CPA in private practice in Missouri, you can claim large-scale, doctor-recommended renovations as a medical deduction on your taxes. For instance, if you need to revamp your main stairway and put an assisted stair lift for an elderly parent living in your home, you could qualify for a deduction.
Per Julie Sturgeon, contributor to Bankrate.com, these additional types of improvements should qualify for a tax break: redoing drywall to remove mold, widening doorways, grading grounds outside the front door to provide easier access to the home, lowering light switches to wheelchair height and modifying/adding alert calling systems (e.g., smoke, fire and/or health).
If you decide to apply for this write-off, Sandy Botkin, CPA, CEO of the Tax Reduction Institute, recommends obtaining a doctor’s note stating the prescribed home improvement, written on his or her official letterhead. She also says that it’s a good idea to include a copy of a home appraisal that shows the increased value of your house after you made the renovation.
2. Energy-efficient appliances
According to the Federal Tax Credit requirements listed on Energystar.gov, you might be eligible for a tax credit if you have energy-saving household items such as solar water heaters or solar panels.
There are certain stipulations for these deductions, though. Solar water heaters must be certified by the Solar Rating and Certification Corporation (SRCC) or another entity that your state’s government approves. Solar panels must adhere to fire and electrical code regulations and supply electricity for your home. Additionally, at least half of the energy the property uses must be purely solar.
3. Home losses due to casualty or theft
Per Gary Tuttle, contributor to Money Crashers, you might qualify for a tax break if your home experienced losses due to fire, storm, theft or vandalism.
There are three criteria the situation must meet for you to claim the deduction. Firstly, the amount lost during each occurrence must total more than $100. Secondly, the total amount of all losses must be greater than 10 percent of your Adjusted Gross Income (AGI). Thirdly, you can only claim the amount that your insurance has not already reimbursed you for.
4. Home business space deduction
If you work from home, you might be eligible for a home office tax break. To secure this deduction, the IRS requires that you use this space as your “principal place of business.” Your business must be legitimate and you should use the space only for business, performing such tasks as meeting with clients. So, a room that doubles as a gym or library would not qualify.
If your office meets this preliminary condition, you will then need to calculate the amount of your deduction. You can do this by calculating the livable space of your whole house, then figuring out the percentage of that space your office takes up. If your home office is large, however, you might need to fill out an IRS Form 8829. Consult with a local tax professional in this case.
Tax paperwork can be confusing; don’t let the challenging terminology and plethora of details get the best of you. Equipped with these financial tips, you’re well on your way to enjoying a more generous tax return this year. As always, consult a tax professional if you have any questions about which deductions for which you qualify.
Source: IMakeNews, Inc.