Tax Day 2019 Checklist: Did you get all your home-related deductions?

Blog posted On April 03, 2019

Tax Day, or the last day for tax payers to file their income taxes, is Monday, April 15^th.  If you haven’t filed your taxes yet, it’s time to get started!  Early last year, Congress passed the Tax Cuts and Jobs Act (TCJA), the most sweeping tax reform legislation in decades.  The biggest change was the increase in the standard deduction: $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly.  Since the standard deduction has increased so significantly, homeowners may need to more closely calculate their home expenses to determine whether or not their total sum exceeds the standard deduction. 

If you are a homeowner, and you haven’t filed your taxes yet, here’s a helpful list of all of your potential tax breaks:

Mortgage interest

Homeowners who financed their home before 12/15/18 and are filing jointly can deduct interest from up to $1 million in mortgage debt and individual filers can deduct up to $500,000.  For loans taken out after that deadline, that figure has dropped from $750,000 for homeowners filing jointly and $350,000 for individual filers. 

Mortgage points

If you bought a home this year and you purchased mortgage discount points (not origination points) you can deduct those.  For example, if you purchased 2 points on a $300,000 loan, you can deduct $6,000. 

Private mortgage insurance

The deduction for private mortgage insurance was renewed.  If you purchased your home with less than a 20% down payment on a conventional loan, you typically have to pay private mortgage insurance.  This is tax-deductible for homeowners whose income is less than $100,000.  For example, if your private mortgage insurance payment is between 0.3% and 1.5% on a $300,000 loan, you will be able to deduct between $900 and $4,500.

Home equity debt interest

In most cases, home equity debt interest deductions have been eliminated, except if the equity is used toward home renovations or improvement.  This new rule applies to all home equity debt regardless of when the loan was originated, unlike the changes to the mortgage interest deduction.

Property taxes

Before 2017, property taxes were fully tax-deductible.  This year, however, there is a $10,000 cap on the combined value of your property, state, and local income taxes, and in eligible states, the deductible sales tax.  If you are a landlord or own an investment property in another state, you can take deductions for each property you own, plus the state income tax. 

Energy-efficient upgrades

Major energy-efficient upgrades, like solar panels, can earn you a tax credit.  Solar electric panels and solar water heaters are eligible for a tax credit of 30% of the cost of equipment and installation.  For example, if you spent $30,000 on solar panels for your home, you could be eligible for $9,000.  This percentage will start to decrease in the coming years.  For 2019, the credit will stand at 30%, in 2020 it will drop to 26%, and in 2021 it will drop to 22%.

Home office deduction

If you are one of many Americans who works remotely from a home office, you may be eligible for a tax deduction, but only if you run your business from your home.  The home office deduction has been eliminated for all other remote workers. 

If you have any questions about your specific financial situation, meet with a financial advisor or tax specialist before filing your taxes. 

Sources: Realtor.com