5 Tax Deductions for Northern Virginia Homeowners

Understanding homeowner tax benefits

Northern Virginia homeowners have access to several tax deductions. As you prepare to file your taxes this year, be sure you include all the tax breaks you can. Here are five valuable tax deductions Northern Virginia homeowners need to include this year.

Source: self-help.org

1. Energy-Efficient and Renewable-Energy Tax Credits

A tax credit is different than a deduction - they are better because you receive a dollar-for-dollar saving that comes directly off your tax bill. The installation of renewable energy equipment in your home can earn you a credit of up to 30% of the total cost of installation. 

Source: consumerenergyalliance.org

If you made any attempts to make your home more energy-efficient this year, you might be entitled to a tax credit. Improvements such as energy-efficient windows and storm doors will lower your tax bill.

Homeowners who have installed renewable energy equipment like geothermal heat pumps and small wind turbines will be on their way to a pretty significant tax credit.

2. Home Office Deduction

You can deduct expenses you incur for the business use of your Northern Virginia home. There are two primary requirements for your home business to qualify as a deduction; it must have regular and exclusive use and be the primary place of your business - this means you must routinely use a portion of your home to run your business. 

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You can either use a room, part of a room or deduct expenses for a detached free-standing structure on your property like a studio or garage. Deductions for a home office are based on the percentage of your home dedicated to your business.

3. Mortgage Interest

Typically, the most significant tax deduction for homeowners who itemize is mortgage interest. Homeowners can deduct the interest paid up to a limit, depending upon the year you took out a mortgage. Married homeowners can deduct interest on the first $750,000.

Source: mynycb.com

4. Home Equity Loan Interest

Northern Virginia homeowners who have accrued interest on home equity loans and lines of credit could receive a tax deduction if the money was spent on home improvements. Before 2017, homeowners could deduct the interest on home equity loans regardless of what the money was used for.  

Source: moving.com

5. Medically Necessary Home Improvements

Medically necessary home improvements may qualify for a tax deduction. Improvements that make a home more accessible like installing support bars or railing, entrance ramps, and the widening of doorways typically do not increase the value of your home; these types of improvements generally are fully deductible. However, improvements that increase your home’s value, such as installing an elevator, are only partially deductible. 

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Owning a Home in Northern Virginia Can Benefit You at Tax Time

Purchasing a home is usually one of the most significant investments you will ever make. Owning a home can dramatically decrease your tax bill, saving you a considerable amount of money. It is essential to consult with a tax specialist to ensure you get all the tax benefits as a Northern Virginia homeowner.