Being a homeowner can be great, but there’s no doubt that it’s expensive, especially in California where the cost of living is high. Between the most of your mortgage, insurance, taxes, and utilities, there’s a lot to pay for. Fortunately, there are some tax benefits available to homeowners that can help you out.
Property Taxes
While property taxes in California are below the national average, coming in at 0.76%, given the higher median price for California homes, you’re probably paying a pretty penny on your property taxes on an annual basis. Fortunately, there are some tax benefits available to California homeowners. Back in 1978, California passed Proposition 13, which limited state property tax limits to 1% of the assessed value of the home. Additionally, homeowners can deduct property taxes from their income taxes up to $10,000.
Solar Tax Benefits
There’s been a big push to improve energy efficiency over the last few years, including the installation of solar panel systems on homes. Given the sunny nature of the California climate, it might make sense to have solar panels installed on your home. This can be expensive though. To help offset the cost, the federal government has offered tax credits for the last few years. They won’t last forever though. These federal tax credits will expire completely by 2023 if they aren’t renewed by congress. If you were thinking about getting a solar panel system installed on your home, do it soon so you can take advantage of those credits.
Mortgage Interest Deduction
Mortgages are responsible for huge amounts of debt. People borrow hundreds of thousands of dollars just to own a home. And while that’s an amazing opportunity for many, you’ll be liable for paying back interest on your loan. This can add tens of thousands of dollars that you have to pay back. To help offset that, you may be able to deduct what you pay in mortgage interest on your taxes. This year, homeowners who bought their homes after 2017 can deduct interest paid on the first $750,000 of their mortgage.
The tax benefits available to California homeowners can be a great help, especially around tax time. There are tax benefits associated with property taxes, solar panel systems, and the interest paid on a mortgage. As you prepare your taxes, make sure you look into all the benefits available to you so you can get some of your home expenses working for you.
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