We realize that April 15th has passed and for most of us, our taxes have been filed, but in case you missed it this year, here are a few tax breaks you should be preparing for now.
1. Set up your home office
If your workstation has been on your bed or the lazy boy chair in the den, it’s time you cleared out the guest room and set up an office. This way you can take care of the home office tax deduction in which the IRS will deduct $5 for every square space up to $1500. Remember, you must use this room regularly and exclusively for work.
2. Install solar panels
One of the remaining energy-efficient tax credits still available for homeowners is solar energy.
“You can take a credit of up to 30%, with no cap, on the equipment and installation costs of solar energy panels and solar water heaters you purchase in 2017,” says Jacob Dayan, partner and co-founder of CommunityTax.com.
Just to qualify, solar panels must be used to generate energy or heat for you home or secondary home, not to heat pools and spas.
3. Pay property taxes early
If you have a big tax bill coming this year, one way to offset the cost is to prepay your property taxes. For example, if you receive a tax notice in December 2017 with a due date of Jan. 31, 2018. You should go ahead and pay it in December if you want to deduct the amount from your current year’s income instead.
4. Keep home improvement records
It’s important for all homeowners to keep detailed records of home improvements such as a new roof, new furnace, bathroom additions, or anything that will increase your home’s value. When the time comes to sell, the amount you spent on the home can save you greatly on capital gains taxes.
5. Pay Points
If you plan to buy a home in 2017 or refinance there is an opportunity to save on taxes in terms of points. Also known as a loan origination fee, loan discount, or discount point, it is basically prepaid interest that persuades lenders to give you a lower interest rate on the loan. You can deduct those points for the same year you buy a home. If you refinance, you can deduct them over the life of your new loan, both are good when it comes to tax benefits.