One major upside to property ownership is the power of tax deductions and write-offs. Did you know, though, that there are deductions and write-offs that extend far beyond the traditional ones such as mortgages? Let’s explore.
Renewable Energy Efficiency Property Credit
Your bottom line may benefit from installing home equipment that harnesses renewable energy sources such as wind and sun. Provided you installed said equipment by the end of December 2016, you are eligible for this tax credit to the tune of as much as 30 percent of its cost, including installation. The Solar Energy Industries Association finds that about 700,000 American homeowners have installed solar equipment since 2010, making this credit ever more popular as time goes on.
Residential Energy Credit
Likewise, if you have worked to make your home more energy-efficient through installing new windows, asphalt or metal roofs, insulation, storm doors, heating systems, or air conditioning, you may be eligible for a tax credit up to $500. The credit has been extended through year-end 2016, and not taking advantage of it is tantamount to leaving money on the table.
If you have exchanged property held for use in trade or business, or held for investment for a like-kind property also to be used for such purposes, you may qualify for tax deferment under Section 1031. Such an exchange may constitute something as simple as a property swap, delayed exchange, or simultaneous exchange – but beware as it can get more complicated from there.
Property Tax Deduction
You’re entitled to deduct real estate property taxes on Schedule A. You’ll find this amount on your annual escrow statement if you have a mortgage with an escrow account. In addition, if you bought a home this year, consult your HUD-1 settlement statement to confirm if you paid any property taxes when you closed on the home – these are deductible too.
Charitable Contribution Deduction
If you itemize, you will be able to deduct charitable contributions or money or property made to qualified organizations. You’ll typically be able to deduct as much as 50 percent of your adjusted gross income, but some cases limit that amount to 20 or 30 percent.