AFY Kim Blue - Home Buyers Guide V1 - 3020

qualify you for mortgage interest deductions. The interest on a home improvement loan is deductible in full, up to a sum of $100,000 in debt. Be sure to keep track of home improvement costs. When you sell the property, if the selling price of your home is more than you spent to procure it, the extra amount will be considered taxable income. You can add the improvement cost to the value of your property to reduce the amount of this taxable income. This can help you save money in taxes following the sale. • Home office deduction. If you are self-employed and work from home, the amount of space in your home that’s dedicated towards business activities is tax deductible. This deduction will include loan interest, insurance payments, utilities, repairs, and more. However, with the TCJA going into effect for 2018 - 2025, people who are not filing as self-employed are ineligible for the deduction. There are other specific guidelines for taking advantage of this deduction, so check with your professional tax preparer before filing. • Home energy tax credits. The IRS rewards homeowners who make efforts to create eco-friendly homes. Solar is particularly lucrative as the installation of a solar power system or solar hot water system earns you a 30% federal tax credit until the end of 2019. After 2019, the credit falls by a few percentage points each year until 2022, when the credit is scheduled to expire. Unfortunately, a large amount of other federal energy efficiency credits expired in 2016, but that doesn’t mean you should give up on being eco-friendly: there are still many state and local tax credits, incentives, and rebates on offer for upgrading your

74

Powered by