Home Owning Tax Benefits

Tax season is upon us again. Full disclaimer, I am not a CPA, attorney, or tax professional but I have been to multiple classes and read a lot of articles to better understand how I can get every legal deduction possible. There are also times you might want to skip some deductions. Here are a few tips and things to consider for future years.

Tips for the Self-Employed

If you are self-employed (1099) and would like to buy a property in the next year, you may actually want to consider not claiming every deduction possible. This will hurt a bit as you will have to pay a bit more, but if you don’t do this, you might not qualify to buy the property you want to buy. I highly recommend talking with your lender about what your NET on your 1099 needs to be to qualify for the loan you want BEFORE you do your taxes.

Tax Benefits of Owning an Investment Property

Besides the things listed in the image above, there are some other ways owning an investment property can save you money on your taxes. You get to claim depreciation (the purchase price of the home minus the land value divided by 27.5 years). On a $250,000 investment property this will be over a $7,000 deduction each year. You can also claim all of the miles that you drive to the home or to buy supplies for the property. If it is “vacation” home, you can write off three trips a year to the property to do maintainence, repairs, or other improvements like decorating. There is important documentation you need to keep so PLEASE talk to a tax professional to make sure you won’t run afoul of the IRS.