Buying a home entails taking on a vast financial responsibility beyond paying a mortgage, but the IRS offers tax incentives to help. Familiarizing yourself with tax breaks can help you get back more at the end of the year. Here are just a few tips for saving on your income taxes.

4 Ways Your Mortgage Can Save You on Income Taxes

1. Deduct for Your Home Office

If you work from home and you pay a mortgage, you may be able to claim deductions for the cost of operating your business. The IRS does outline a few stipulations, so not every homeowner can claim this expense. The restrictions require that you have a specific section of the home that is only used for your business and that you work out of the home on a regular basis.

2. Take Deductions for Interest

You can also qualify to deduct some of the interest from your home loan payments as long as you use the property as your primary residence. You may be able to deduct the interest paid on a second piece of real estate, provided that the property is also used as a personal residence. While rental property doesn’t qualify if it’s occupied solely by tenants throughout the year, you can claim interest deductions if you occupy the property for more than 10% of the time.

3. Home Improvement Deductions 

First-time homeowners are often advised to save all repair and renovation receipts, even though these expenses aren’t deductible within that same tax year. This is because those expenses can be used to offset the taxes owed upon the sale of the property. By tallying your total investment in the property, you can adjust your expenses to balance against the profit you made from the sale. This will allow you to pay lower taxes on the sale.

4. Claim Tax Credits for Energy-Efficient Improvements

While not all home improvements will meet the conditions for tax credits, certain improvements that incorporate energy-efficient technology will qualify. For instance, you can claim a 30% deduction on the cost of having solar panels installed on your home. This is a one-time tax credit that will decrease over the next two years and be eliminated after 2021, so be sure to act quickly to take advantage of it.

If you’re interested in buying a new home, the first thing you will need to do is to get pre-qualified for a loan. Serving the O’Fallon, MO, area for more than two decades, Dan Main is a loan officer with the expertise and market knowledge to help you get the mortgage that will best fit your budget. You can start the process of qualifying by visiting his website, or by calling (636) 284-4144.

Dan Main: NMLS # 502036

Flat Branch Mortgage Inc: Missouri NMLS #18-1713, Colorado NMLS# 224149

947 Waterbury Falls Dr

This is for informational purposes only and not an offer to lend or extend credit. Lender is not a tax consultant. Please seek advice from a tax professional. Resources: Credit Karma and TurboTax