Tax Write offs Every Omaha Homeowner Should Know
Your Omaha home is not only where the heart is, it is where all of your tax deductions reside. Despite home values still being depressed, Omaha homeowners can rely on sizeable tax breaks. The size of your tax break depends on your mortgage and income bracket, as well as the updated features you have added to your home that year. There are many tax breaks that Omaha homeowners should be taking advantage of.
Local Omaha movers have uncovered some of the most significant and perhaps unknown tax breaks that homeowners should be claiming:
- Points on home mortgage and refinancing- Omaha homeowners can write off origination and discount points on their tax returns, which is important to know if you relocated to Omaha this past year. One point is equal to 1% of the principal loan amount. The IRS considers the points to be prepaid interest. Omaha homeowners need to be eligible to deduct the points all at once, or else they will have to spread them out over the life of the loan.
- Interest on Omaha home improvement loans- The IRS considers the interest on an Omaha home improvement loan to be completely deductible, up to $100,000. Interest paid on a home equity line of credit (HELOC) is also tax deductible, unless the loan is worth more than the property.
- Property taxes- Omaha property taxes are almost always deductible. Omaha homeowners cannot write off attorney or appraisal fees, credit reports, and title insurance costs, even though the look like taxes. So, if you are moving to Omaha, you can use your property taxes as a deductible, but none of the aforementioned.
- Energy-Efficient tax credit- If you made efforts to make your Omaha home energy efficient after 2014, the IRS will give you a tax credit of $500 to install energy efficient equipment, such as storm doors, energy efficient windows, insulation, or air conditioning and heating systems in your home. A tip from Omaha movers: since some of these projects can cause a lot of commotion in your home, it is best to have them completed before you move in.
- Renewable-energy tax credit- If you have installed equipment such as solar panels or wind turbines, which use sun or wind power to help power you Omaha home, then you may be eligible for the Renewable Energy Efficiency Property Credit. This tax credit is good for up to 30% of the cost of equipment, as well as installation fees.
- Private Mortgage Insurance- Omaha home owners may be eligible to claim the deduction for mortgage insurance premiums or private mortgage insurance in their tax return, unless their income exceeds $109,000.
- Home expenses and improvement- If you decide to make improvements to your Omaha property, you cannot write off the cost of the Omaha home improvement, unless you took out a home loan to pay for it. However, you can add the cost to the asking price if you decide to sell your Omaha home, which should ideally diminish the capital gain when you sell your home.
- Buying a home- The IRS will allow first time homebuyers to withdraw up to $10,000 from their traditional IRA (an account that allows an individual to save for retirement with tax-free growth) penalty free, to help with the purchase of their Omaha home. Your spouse can add another $10,000 from their IRA account, which is a total of $20,000 that you can use towards purchasing your Omaha dream home.