Sure, your house will likely increase in value well above the inflation rate over the years you own it. But that’s not the only way it’s likely to be the best investment you’ll ever make. Your Georgia home can also grant you generous tax benefits in a number of ways.
So, keep your residence well-maintained and financially protected with a home insurance policy that covers all the bases. Then enjoy these various federal, county, and Georgia tax benefits for homeowners.
The Cornerstones of Georgia Home Insurance Tax Deductions
Your mortgage can encompass a lot of separate expenditures. When you get used to handling a single monthly bill, it can be easy to forget exactly what you’re paying for. It’s worth remembering, though, because several of those items can fatten your tax return.
Have you borrowed against your house? Once again, you might receive tax benefits that can reduce your bill considerably.
Make yourself well acquainted with the following before you file your taxes.
Mortgage Interest Deductions
When you first get your house, you can be unpleasantly surprised to see just how much of your house payment is devoted to interest on your loan. This proportion slowly shrinks through the years, but mortgage interest is always a big part of your payment.
The only good news on this front is that your interest is tax deductible on your state taxes. Take note of Form 1098 prepared by your mortgage lender. It indicates how much you paid in mortgage interest that tax year. Make sure your tax preparer receives this information when filing your tax returns.
Property Tax Exemptions and Deferrals
The state grants a standard $2,000 homestead tax exemption from county and school taxes for the primary residence of homeowners.
Age can also be an advantage when it comes to state taxation for property owners. Georgians 65 and older, with a household income of $10,000 or less, not counting retirement, pension, or disability payments, can get an additional $4,000 exemption from county taxes on their properties.
In addition, certain Georgians 62 and older can take advantage of the Property Tax Deferral Program for Homeowners. If you had an annual gross income of $15,000 or less during that tax year, you can defer the payment of ad valorem taxes, which are those based on the assessed value of a property.
Private Mortgage Insurance (PMI) Deductions
PMI is insurance you pay to protect your lender when you buy your house if you take out a conventional loan and pay less than 20 percent down. The good news here is that your PMI insurance can be tax deductible against your state taxes in Georgia.
Home Equity Loan Deductions
If you take out a loan on your house, the part of it that’s used to improve your home is deductible on your federal taxes. In other words, if you use it to renovate your kitchen or install a new roof, it can be deductible, but not the portion of the loan that’s used to take a family vacation.
Uncovering Lesser-Known Tax Advantages
There are still more ways of reducing the burden on your tax returns in the Peach State. If you run a business out of your house or commit to energy efficiency, it could benefit your bottom line. Here’s how.
Energy Efficiency Benefits and Credits
You’ve got both federal and state financial incentives for converting your house to clean energy resources. The feds offer both the Energy Efficient Home Improvement credit and the Residential Clean Energy credit, while the state kicks in with the Home Efficiency Rebates (HER) and the Home Electrification and Appliance Rebates (HEAR) programs.
As a result of all the acronyms, you could qualify to receive credits or rebates on both federal and state tax returns for such clean energy upgrades as solar panels and water heaters, wind turbines, geothermal pumps, energy-efficient appliances, and other leading clean energy technologies. The savings add up while also increasing the resale value of your house.
Home Office Tax Deduction
Do you have a business that you conduct from your home? Are you a freelancer or a farmer? If you have a home business, you might be able to deduct the portion of your mortgage and utilities for that space.
You only qualify if part of your house is dedicated solely to running that business. For instance, you can’t call your kitchen a work-dedicated space because you send and receive emails from your breakfast table. But if a room or more is only used as a home office or business workspace, you might qualify.
There are a couple of ways of estimating and calculating the deduction. Ask your tax preparer for details.
FAQs About Georgia Homeowners Tax Benefits
Here are answers to some of the most common questions homeowners might have regarding Georgia tax benefits.
Is Home Insurance Tax-Deductible in Georgia?
Not in most cases as the owner of a private residence. However, if you use a portion of your residence for a home-based business, a tax deduction for taxes might be possible. Ask your tax preparer for details.
What Home Improvements Qualify for Tax Credits in Georgia?
You can obtain a 30% property tax credit by installing clean energy products, such as solar panels, solar water heaters, wind turbines, geothermal pumps, and similar items, in your new or existing home. Installation labor costs are included in the credit.
What’s Not Eligible for Tax Deductions?
You can’t claim a deduction for home improvements beyond the installation of clean energy technology. In fact, some home improvements will raise the value of your home and could increase your property tax bill in future years.