End-of-Year Tax Benefits for Homeowners and Investors

As the year comes to a close, it's time to evaluate your financial situation and take advantage of the tax benefits available to homeowners and real estate investors. These incentives can help you reduce your taxable income and set yourself up for financial success in the coming year. Here's a guide to the key deductions, credits, and strategies you should consider before December 31.

1. Mortgage Interest Deduction

One of the most significant tax benefits for homeowners is the ability to deduct mortgage interest. If you’re paying off a mortgage on your primary or secondary residence, you may qualify for this deduction.

• How It Works: Deduct the interest paid on loans up to $750,000 for homes purchased after December 15, 2017.

• Investor Tip: For rental properties, mortgage interest is deductible as a business expense.

2. Property Tax Deduction

Homeowners can deduct up to $10,000 in property taxes paid during the year. This applies to both primary residences and second homes.

• Act Now: If you haven’t yet paid your property taxes for 2024, doing so before December 31 could maximize your deduction for this tax year.

3. Depreciation for Rental Properties

For real estate investors, depreciation is a powerful tool for reducing taxable income. The IRS allows you to deduct the cost of wear and tear on rental properties over time.

• Key Benefit: Depreciation can offset rental income and even create a "paper loss" that lowers your tax liability.

4. Energy-Efficient Home Improvements

If you've upgraded your home with energy-efficient improvements, you may qualify for tax credits. These credits directly reduce your tax bill and are available for:

• Solar panels

• Energy-efficient windows and doors

• Insulation and HVAC systems

• Pro Tip: The federal government has extended many of these incentives, so check eligibility before filing.

5. Closing Costs and Points

If you purchased or refinanced a home this year, you might be able to deduct some of the closing costs:

• Eligible Costs: Points paid to lower your mortgage interest rate and certain loan origination fees.

6. Opportunity Zone Investments

Investors can defer or reduce capital gains taxes by reinvesting profits into Opportunity Zones—designated areas aimed at boosting economic growth.

• Time-Sensitive: Consider making investments before the end of the year to maximize benefits.

7. Harvesting Tax Losses

For investors, selling underperforming rental properties before year-end may allow you to offset gains from other investments.

• Plan Ahead: Consult a tax professional to ensure this strategy aligns with your overall financial goals.

8. Home Office Deduction

For those who work from home, a portion of your home expenses (utilities, repairs, insurance) may be deductible.

• Note: This deduction is available to self-employed individuals or those running a business from home.

9. Prepay Expenses

Real estate investors can prepay certain expenses, such as:

• Insurance premiums

• Maintenance costs

• Property management fees

• Benefit: Prepaying shifts deductions into the current year, lowering your immediate tax liability.

10. Charitable Contributions

Donating real estate, stocks, or cash to eligible charities can reduce your taxable income.

• Pro Tip: Ensure the charity is IRS-qualified and keep receipts for all donations.

Final Steps

1. Gather all receipts and documentation for eligible expenses.

2. Consult with a tax professional to ensure compliance with IRS regulations.

3. Act quickly to take advantage of these opportunities while there’s still time.

End the year on a financial high note. Whether you’re a homeowner or investor, leveraging these tax benefits can maximize your savings and set you up for success in 2025.

📲 Need advice on buying, selling, or investing in real estate? Contact DS Realty Group today to get expert insights and personalized guidance.

Make your real estate goals a reality while securing financial peace of mind.