Tax Tips for Homeowners

If you recently bought a home or made improvements to your property, find answers to some common tax questions that could save you hundreds or thousands of dollars when filing your taxes.

1. I’m a new homeowner. Can I get a deduction for the real estate taxes and mortgage interest I paid in 2014?

  • You can deduct your home mortgage interest (and certain points) on your tax return if you (1) itemize deductions, and (2) the mortgage is a secured debt on your main home or second home. The loan may be a mortgage, second mortgage, line of credit or home equity loan. You should receive Form 1098 from the mortgage company showing the total interest you paid during the year. Include the amount you paid in interest on Schedule A (Form 1040), line 10.
  • Real estate taxes are generally deductible. These include state and local taxes based on the value of your property. Taxes charged that improve the value of the property (assessments for sidewalks, water mains, sewer lines, parking lots) that are not for maintenance or repair can’t be deducted. Deduct your real estate taxes on Schedule A (Form 1040), line 6.

Learn more about the Real Estate Taxes and Home Mortgage Interest Deductions.

2. Are the home energy credits available for 2014?

Yes. If you made any energy-saving and green-energy home improvements to your main residence in the U.S. in 2014, you may be able to save money at tax time with one of two energy credits. The credits will reduce the amount of tax owed by filing Form 5695 (itemized deductions are not required).

  • Non-business Energy Property Credit:
    • This credit is for making qualified energy efficient improvements such as insulation, energy-efficient exterior windows and doors and certain roofs. You can’t include the installation costs for these improvements.
    • You can also claim the credit for residential energy property, including high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. You can include labor and installation costs.
    • For the 2014 tax year, you could get credit for 10 percent of the cost of residential energy improvements, with a lifetime limit of $500 (only $200 can be used for windows). If you claimed this credit in the past, you can’t claim more than $500 in all years combined.
    • The home improvements must have been installed before January 1, 2014
  • Residential Energy Efficient Property Credit:
    • This credit is for qualifying alternative energy equipment, including solar electric systems, solar water heaters, geothermal heat pumps, wind turbines and fuel cell equipment.
    • The credit is for 30 percent of the qualified expenses, including labor costs. There is no maximum cap, except for fuel cell property.

3. I bought a home in 2014. Can I claim the homebuyer tax credit?

The first-time homebuyer credit is no longer available. Some homebuyers who used the first-time homebuyer credit in 2008, 2009 or 2010, or sold their home, may have received a notice to repay the credit.

4. Can I deduct my property insurance premiums on my tax return?

No. Property hazard insurance premiums cannot be deducted, even though this type of insurance is usually required to get a home loan. Some other nondeductible home ownership expenses include:

  • Home repairs
  • Closing costs and additional principal payments on your mortgage
  • Depreciation of your home
  • Local assessments to increase the value of your neighborhood (new sidewalks, water and sewer lines, etc.)
  • Home ownership association fees

*Remember, the deadline to file your federal and state taxes is Wednesday, April 15, 2015.