Tax season has officially begun, and if you’re like most people, you’re dreading doing your taxes. But fret not fellow homeowners! We’ve got some useful tips to help you get an extra tax break this year! While many homeowners know the more common home-related tax breaks that apply to them, we’ve compiled a list of a few lesser-known areas where homebuyers may qualify for a credit or deduction.
Home Energy Credits 
If you installed items like solar hot water heaters, solar electric equipment, wind turbines or fuel cell property, your credit could be worth up to 30 percent of the total cost. The Residential Energy Efficient Property Credit is available through 2016, and the good news is there’s no dollar limit on the credit for most types of property! If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return. If you have any equipment that qualifies of the Residential Energy Efficient Property Credit, use Form 5695, to claim these credits.
Simplified Home Office Deduction
If you work from home, you probably don’t bother deducting your home office expenses because the rules are complex, you need to sift through a million receipts (if you even have them), and you’re worried it will increase your chances of getting audited. But don’t you worry! In 2013 the simplified option for home office deduction came about and “simplified” home office deductions big time.
All you have to do is multiply the square footage of the part of the home used for your home office (up to a maximum of 300 square feet) by $5 a square foot. The maximum deduction is $1,500. It’s an easy, time-saving calculation, that will save you money and sanity!
Points on Home Mortgage and Refinancing 
If you bought a home in 2015 with a mortgage, then in addition to the mortgage interest, you can most likely write off the points on your tax return. Because the IRS considers points to be prepaid interest, one point only equals 1% of the principle loan amount.
The confusion with writing off points comes when figuring out whether you’re eligible to deduct the points all at once, or if you have to spread the costs out over the life of the loan. Generally speaking, if you bought your primary home or got a loan on that home in 2015, you can take the deduction all at once. However, for a second home, or a refinanced home, you have to deduct the points over the life of the loan.
For example, on a 30-year mortgage, you can only deduct 1/30th of the points per year. So if you had $3,000 in points, divide that by 30 to arrive at a total of $100 in points to deduct each year.
For more helpful tax information, a good place to start is the IRS Tax Information for Homeowners Guide.
Cesi Pagano
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