Beneficial Tax Deductions for Florida Homeowners are sometimes overlooked. With tax day, April 15, 2020, approaching, it's important to be aware of beneficial tax deductions for Florida homeowners.
Tax reforms enacted in 2017 have remained largely unchanged. Yet it remains imperative to speak with your CPA if you have any questions on whether your primary or secondary home qualify for the following deductions.
On mortgages acquired after 2017, taxpayers are only allowed to deduct interest on mortgage debt totalling $750,000 (or $375,000 for married couples filing separate returns). Those holding existing debt from prior to December 31, 2017, are still able to deduct interest for loans up to $1 million dollars.
Beneficial Tax Deductions for Florida Homeowners - Vacation Homes
If you purchased a second home prior to 2018, you can deduct mortgage interest as long as your combined mortgages are under $1 million.
*Also, it's important to note any vacation homes purchased after 2017 are no longer permitted to deduct mortgage interest under this rule. Learn more about deducting interest on second residences at IRS.gov.
Mortgage Points and Insurance
If you purchased a home in 2018, loan points for your primary residence may be deductible. Generally, these deductions are for a portion of the points spread throughout the life of the loan, but in rare cases, the full amount may be deducted in the year paid if you meet certain requirements. This extends to home improvement loans and refinanced loans as well. Learn additional details about points at IRS.gov.
Of course, you can deduct your property taxes off your tax return! Keep your property tax bills and proof of payment. State and local tax deductions are capped at a combined total deduction of $10,000 ($5,000 if married filing separately). Learn more about deductible taxes at IRS.gov. Additionally, be sure to read about Homestead Exemptions here.
Medical Home Improvements
Any changes that have been made to your home related to medical reasons for you, your spouse, or your dependents are deductible. Whether you are constructing entrance ramps, adding handrails, or even an elevator, improvements may be included if you itemize your deductions. However, be aware that any changes that add value to your home – such as installing an elevator – may be deducted only to the extent they exceed the increase in the home value caused by the improvement.
Beyond improvements, you can also deduct any fees related to operation and upkeep of that improvement. For example, the cost of electricity to operate the elevator, or the service of a maintenance man. Read more related to medical and dental expenses at IRS.gov.
Energy Efficient Upgrades
Renewable Energy Tax Credits allow you to deduct 30% of the costs of major energy installations. This includes solar water heaters, solar panels, geothermal heat pumps, small wind turbines, and fuel cells. Installations qualify on home you own and use as a residence. There is also a gradual step down to the credit value between now and 2022.
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022
Expires: December 31, 2021
Find out exactly what qualifies as energy-efficient products which are eligible for tax credits on the EnergyStar website – 10% of the cost up to $500. These may include insulation, exterior windows and skylights, water heaters, and central air conditioners.
It is wise to speak with your personal accountant to determine the tax deductions for which you are eligible. Ask them to go over which of these benefits are suitable for your tax deductions.
To learn more about Boca Grande real estate and the surrounding area - contact Carol Stewart: 941.276.1162