The tax code is more than 70,000 pages long and we all don’t have time to read through every line – that’s why there are tons of tax deductions that are commonly missed by homeowners and other tax payers.
We don’t want you to miss anything you’re due so check out the list of underused tax deductions and see if you’re eligible to get some of that hard earned money back this tax season.
For Recent Sellers: Sales Gains
If you sold a home in 2014, you may qualify for an exclusion on the net sales gain or the money you made from the sale itself: Selling price – Purchase price + Any improvements. This can be up to $250,000 for an individual or $500,000 for a couple.
If your home was used as a personal residence for two of the past five years then you are eligible to qualify. If you moved out and then back in you could be eligible for a partial exclusion so talk to a tax professional about figuring out the details.
For Recent Buyers: Points
If you paid points to get a better mortgage rate on your home loan, there’s a tax break you can claim. The IRS lets you deduct points in the year you paid them if the loan is to purchase or build your primary residence, paying points is an established local business practice and the points were within the common range.
Green Home Improvements
If you make improvements to your home like low-flow plumbing appliances, solar panels or dual-paned windows, you could be eligible for state, county and/or city tax credits.
Green home improvement tax breaks have a lifetime credit and cap out at $500 so keep that in mind if you plan to claim any this year.
For Rental Properties
When you rent property to others, you must report the rent as income on your taxes. But you can deduct, or subtract, your rental expenses — the money you spent in your role as the person renting out the property — from that rental income, reducing your tax obligation. Many expenses can be deducted in the year you spend the money, but depreciation is different.
Depreciation for Rental Properties
Depreciation spreads out your tax deduction over the useful life of your rental property. In the case of a rental property, depreciation is the process by which you would deduct the cost of buying or improving rental property. Say you buy a building to use as a rental. Rather than one big tax deduction in the year you bought the property, you would take a portion of the cost of the building as a smaller depreciation deduction each year.
To find out more, read about it on the IRS website to see if it makes sense for you to take advantage of your rental property depreciation on your taxes.
For Clergy or Military Housing Allowance
Ministers and members of the U.S. armed services who receive a housing allowance that is not taxable can deduct their real estate taxes and home mortgage. Even better news? You don’t have to reduce your deductions by your nontaxable allowance.
Home Office
If you work from home, you have the option to deduct $5 per square foot of your home dedicated to your home office or business use. This simplified way of figuring out your home office deduction can be used for up to 300 square feet of home office space or storage, giving you a possible deduction of up to $1,5000 for the year.
Small-Business owner Solo 401(k)
If you do have a home office because you’re self-employed or us it as a part of your small-business, a Solo 401(k) could be another way to save. Not exactly a tax deduction, it is a way to get a break this tax season. You can shelter part of your income in a tax-deferred Solo 401(k). These are for individuals who are self-employed and small business owners without any full time employees.
Up to $53,000 can be put into the account and holders over the age of 50 can also make a catch-up contribution of up to $6,000 more. Plus the cost of setting up and maintaining this Solo 401(k) plan can be deducted as an expense for your business.
If you’re still unsure of which tax deductions you’re eligible for, talk with a tax professional.
