Buying a home in Florida is always a sweet deal. You get to enjoy the beautiful weather, a high ROI, and of course, plenty of tax benefits. No wonder the real estate market is flourishing heavily.
If you own a property in Florida, we have some good news for you. Listed below are the top 5 ways you can take advantage of state and local tax deductions, and save some serious bucks!
Premium on mortgage
If you paid your mortgage insurance premium (MIP) during the previous fiscal year, you are eligible for an income tax deduction. There are certain conditions you have to fulfill in order to enjoy this benefit and get a full deduction:
- Your mortgage loan has been active since January 1, 2007.
- Your adjusted gross income (AGI) has to be $100,000 or less if you are filing your returns solely. If you and your spouse are filing returns individually, the gross income of each person is capped at $50,000.
When you're paying back your mortgage premium, a certain amount goes towards the principal money you borrowed, and the rest goes towards the interest payable on the mortgage. As a homeowner based in Florida, you can file deductions for the interest amount you paid in the last year.
Here are the criteria for eligibility of deduction:
- Deduction is available only for the purchase of a primary or second home.
- Deduction is available for home improvement, buying a new home, or building a new home.
- If you bought your home before December 15, 2017, you are eligible to get a tax deduction on interest paid on your mortgage. The upper debt limit is up to $1 million.
- If you bought your property post December 15, 2017, you are eligible to file a deduction for the interest paid on up to $750,000 in debt, if filing solo. For married couples filing taxes separately, the debt limit is $375,000.
Property tax paid
If you're in Florida, chances are you've already paid your real estate tax through the escrow account linked to your mortgage. Else, you might have paid it directly to the federal authority. No matter what the situation is, the amount you paid is eligible for deduction.
The deductible amount is limited to $10,000 for each individual homeowner and $5000 if a married couple is filing their returns separately.
Home improvement on medical ground
During 2021, if you made any significant changes to your home on medical grounds, you are eligible for a partial deduction.
The only condition is that you are allowed to deduct the expenditure amount that is more than 7.5% of your AGI.
A full deduction is available if the home improvement equipment did not increase the value of your property. Things like building a ramp, improving bars and railings, installing warning or safety systems, as well as the expense that is needed to run the medical equipment, are all eligible for deduction.
Florida Homestead exemption
This is not a deduction, but rather an exemption available for all homeowners of Florida. If you purchased your property in the last tax year, then you can get an exemption of $25,000 on the first $50,000 of the property's assessed value. The property in question must also be your permanent residence.