Tax Tips for Homeowners: What You Should Know Before Year-End

As the year winds down, homeowners have a chance to maximize tax savings before tax season arrives. Here are some key tips to consider before the year ends:

1. Maximize Mortgage Interest Deductions
If you itemize, you can deduct mortgage interest on your primary residence. Consider making an additional mortgage payment before year-end to increase your deduction.

2. Prepay Property Taxes
Prepaying property taxes for the upcoming year can boost your deductions for the current year, reducing your taxable income. Just be mindful of any local tax limits.

3. Claim Energy-Efficient Home Improvements
Made energy-saving upgrades? You may qualify for tax credits. Solar panels, energy-efficient windows, and insulation can earn you a Residential Energy Efficient Property Credit—a great incentive for green home improvements.

4. Take Advantage of First-Time Homebuyer Programs
If you're a first-time homebuyer, check for available tax credits or state-specific programs. While the federal first-time homebuyer credit expired, many states offer ongoing incentives.

5. Home Office Deductions
If you work from home, you may be eligible for a home office deduction. You can claim a portion of your home-related expenses, like utilities and mortgage interest, if you use part of your home exclusively for business.

6. Consider a 1031 Exchange (For Investment Properties)
For real estate investors, a 1031 exchange can help you defer capital gains taxes if you reinvest in similar property. Make sure to complete the exchange within 180 days.

7. Review Capital Gains on Home Sales
If you’re selling your home, remember that you may qualify for a capital gains exclusion—up to $250,000 for single filers or $500,000 for married couples—if you’ve lived in the home for at least 2 of the last 5 years.

Year-end is the perfect time to review your tax strategy as a homeowner. From mortgage interest to energy-efficient upgrades, these simple steps can help reduce your taxable income. Always consult a tax professional to make sure you're taking full advantage of all available deductions and credits.