Did you purchase a home this year? If so, there are certain ways this purchase will affect your taxes. Many new homeowners report significant savings on their tax returns due to new homeowner tax deductions. Simplified Tax has been providing quality accounting services to their Sparta, WI, clientele for over 30 years. Below they’ve outlined exactly how purchasing a new home will affect your taxes. 

Tax Breaks When You Buy

Some of the major benefits of purchasing a new home are the deductions the IRS allows you to take. The primary deduction, and often the largest for most homeowners, is that of your mortgage interest. This deduction can reduce your taxable income by the thousands, depending on the interest you pay. Other deductions include points you pay on the sale and mortgage insurance premiums. In addition, the IRS allows you to take an early payout from your IRA, up to $10,000, penalty free.

Annual Real Estate Taxes

Keep all of your estate documents in order since you are allowed to deduct what you pay in annual real estate taxes on any property you own. This is an annual deduction you are allowed to take, so long as you own and pay taxes on the property.

Home Improvements & Energy Credits

Save all your receipts for home improvements made and keep them filed away safely. While you can’t deduct these expenses on your annual taxes, they will be added to the value of your home if should you decide to sell. In addition, you are allowed a tax credit of up to $500 if you invest in energy-efficient appliances, solar panels, or eco-friendly insulation.

If you’ve purchased a new home within the last year, you might see significant savings and other benefits on your tax return. Work with a qualified accountant to get the most out of your home purchase deductions. Simplified Tax is proud to provide top-notch accounting services to its long-standing clientele. If you’re searching for a trusted accountant, call them today at (608) 269-2633 or visit their website for more information.