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By your 50s, your home is probably your largest asset and one of your biggest opportunities to save on taxes.
Yet many homeowners believe they have already optimized their deductions, ignoring smaller, less obvious breaks that could contribute to meaningful savings.
Experts suggest these strategic adjustments that could reduce your tax bill by hundreds or even thousands each year.
property tax relief program
Many homeowners over the age of 50 miss out on local property tax relief simply because they don’t realize they need to apply.
“In some areas, these programs can stabilize a home’s taxable value, helping to prevent large property tax increases due to increases in home values,” said Colton Pace, co-founder and CEO of Home Improvements. onewellA property tax appeals company.
These programs are usually offered at the county or state level and often require a simple application through your local assessor’s office, but you have to apply.
energy efficiency tax credit
Energy upgrades are another overlooked way to cut taxes as well as reduce monthly expenses.
“Homeowners can claim 30% of the cost of qualified improvements like heat pumps, insulation, efficient windows or solar installation, although some upgrades have an annual limit,” Pace said.
State and city credits can often be combined with federal credits, he said, providing both tax savings now and long-term reductions in utility costs.
Home office and income-offsetting deductions
For homeowners looking for ease of retirement or generating part-time income, certain home-related deductions can offset taxable income. These are often missed because people don’t think of themselves as “business owners,” according to Brian Zink, CEO and founder. No advance tax relief.
As long as the retiree brings in part-time income, such as from a freelance gig or side hustle, “a home office can offset self-employment income,” he said.
medical home improvement
Some old-in-place upgrades may qualify as a Medicare deduction. Zachary Hellman, Enrolled Agent (EA), Certified Fraud Examiner and Owner Hellman & Associatesnoted that these reductions may be more subtle than homeowners expect.
Allowable medical deductions “may include ramps, wider doors, handrails, grab bars and similar accessibility improvements,” he said.
To make sure your medical correction qualifies, you need to check with the IRS.
Narrowing down the size and timing of your sales
Selling a home later in life can offer big tax benefits, Zink said, namely the home sale exclusion, which can protect large amounts of gain from taxes.
If the ownership and use tests are met, the federal home-sale exclusion is up to $250,000 for single filers and $500,000 for married couples filing jointly, Hellman said.
With lower ongoing costs from downsizing, it can create both immediate and long-term financial benefits.
capital home improvement
Homeowners often miss out on future tax savings when selling a home, Hellman said. “Capital improvements increase the tax basis of a home, which can reduce taxable gains when you sell the home later,” he said.
Homeowners should keep receipts and stay organized during the year for later tax filing, especially those whose property has increased substantially in value.