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Florida Homeowners Are Saving Thousands With These 2016 Tax Deductions

by BROOKE GOLD HASSON | Jan 06, 2016

TaxDeductionsLet the countdown to tax season begin! Between gathering the appropriate forms and information to determining how to apply them, tax season can be a stressful time. Just the thought of filing taxes makes most Florida homeowners cringe…

Fortunately, there are some federal tax credits that can help homeowners save money. Get the most out of the tax benefits of homeownership this year by checking out these five tax breaks and deductions. Which ones do you qualify for?

Residential Energy-Efficient Property Credit

Through the renewable energy-efficient property credit, you can receive credits of up to 30 percent of equipment and installation costs for energy efficiency improvements. This credit is available for property placed in service through Dec. 31, 2016.

Qualifying improvements include:

  • Solar electric systems
  • Solar water heaters
  • Fuel cell property (credit limit of $500 for each one-half kilowatt of capacity of the property)
  • Small wind energy property
  • Geothermal heat pumps

To apply, complete Form 5695 and attach it to Form 1040.

Non-Business Energy Property Credit

You can receive a 10 percent credit for qualified energy-efficient improvements. Installation cost is not included. In addition, a credit is available for select high-efficiency heating and air-conditioning systems, high-efficiency water heaters, and stoves that burn biomass fuel, including the costs of installation.

There is a lifetime limitation of $500, of which only $200 may be used for windows. Qualifying improvements must have been made prior to December 31, 2014.

To apply, complete Form 5695 and attach it to Form 1040. 

Mortgage Interest Deduction

Mortgage interest is typically the largest home-related tax deduction for homeowners. If you itemize your deductions, you may be able to deduct the mortgage interest of your first or second home. 

If you paid more than $600 in annual interest (including points and mortgage insurance premiums), you should receive a 1098 form from your mortgage lender by January 31. Most likely, it will be included with your monthly mortgage statement. 

If you paid less than $600, check your year-end mortgage statement and look for the year-to-date amount of interest paid. That will indicate how much mortgage interest you paid in 2015.

​For 2016, the 1098 form looks a bit different from last year. Pay close attention to boxes 1, 6 and 10 on your 1098 form. You will need these figures to deduct mortgage insurance on your tax return.

Home Office Deduction

Do you use your home for business? You may be eligible for deductions on related expenses. Effective January 1, 2013, Florida homeowners also have access to a simplified option for calculating the business use of their home. 

Simplified Option Features:

  • Standard deduction of $5 per square foot of home used for business (maximum of 300 square feet).
  • Allowable home-related itemized deductions (example: mortgage interest, real estate taxes) claimed in full on Schedule A.
  • No home depreciation deduction or later recapture of depreciation for the years the simplified option is used.

To apply, complete Form 8829 and file with Schedule C (Form 1040).

Casualty, Disaster, and Theft Loss Deduction

Did a disaster strike your house in 2015? You may be able to deduct casualty and theft losses relating to your home or personal household belongings on your federal income tax return. 

To calculate the deductible loss, subtract the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty. Whether it’s a casualty or theft loss, you must reduce it by any salvage value or home insurance reimbursement you received or expect to receive.

To apply, complete Form 1040, Schedule A (or Form 1040NR, Schedule A if you are a nonresident) and Form 4684.

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