As we begin another year of a stable economy, more people are considering purchasing a home. Purchasing a home is not something that should be taken lightly; it is one of the biggest investments you will make in your lifetime. If you are considering purchasing a home you have probably gone over the cost and payments over and over again. But if you’ve gone over all the numbers and you haven’t considered all the 2016 tax write-offs for homeowners, there’s a good chance your numbers aren’t right. So to make sure you’re not missing anything check out some of the potential write-offs below!
Now your down payment itself is not a tax write off, but how you paid for your down payment can provide you with tax breaks. If you are a first time home buyer you can cash out a traditional or Roth IRA without incurring penalties to use towards your down payment. The only catch to this is that you cannot cash out more $10,000. With a 401K you can take out up to 50% of the money in your account in the form of a loan for a down payment. The amount cannot exceed $50,000 and the interest you pay on the loan is not tax deductible.
Selling your home
When it comes to tax write-offs, most people overlook the write-offs of selling a home. When you sell your home you are often faced with a capital gains tax and tax write-offs are a great way to reduce that tax. Some home repairs can be used to reduce the capital gains tax, if they’re done within 90 days of selling your home. The repairs also have to be done with the intention of selling your home; meaning the repairs made it easier to market in some way. Other write-offs for selling your home include advertising, broker fees, and title insurance.
Renewable Energy Tax Credit
If you have thought about ways you can save money on power and get a tax credit for doing so, this is an ideal option. With the renewable-energy tax credit you must install some sort of renewable energy source in your home. Solar panels are the most common, but wind energy and a few other options qualify as well.
This tax credit is set to expire in 2016, so if you want to take advantage of it you need to install your system before December 31, 2016. The tax credit can be up to 30% of the cost of equipment and installation.
Energy Efficient Tax Credit
So, perhaps you want to make some energy efficiency improvements to your home, but are not ready to tackle solar or wind power quite yet. If this is the case you need to look into the energy efficient tax credits, which covers improvements to your home that make it more energy efficient. These improvements include storm doors, air conditioning and heating systems, energy efficient windows, and installation. The credit can go up to $500 and is set to expire on December 31, 2016.
These are just some of the 2016 tax write-offs for homeowners, keep doing your research, and you’ll find even more!