Are There Tax Breaks for Renters?
Yes, there are! Many people who are purchasing their first house in Granbury utilize the fact that the interest on their home mortgage is tax deductible. If they are moving from a rental unit, that can be the equivalent of being able to pocket a little more of your earned income. Texas Homeowners get tax deductions, so why shouldn’t you? Just because you can’t write off mortgage interest or get a big deduction for installing solar panels doesn’t mean you don’t have other tax incentives available to you. Here are some tax breaks that renters can take advantage of:
Higher Education Deductions
Many college students are also renters, both first-time college students in young adulthood and older students who have families. No matter which category you fall into, you can deduct up to $4,000 when you file your tax return, simply by being a college student. There is one stipulation, though: Your adjusted gross income must fall below $65,000 if you are single, and below $130,000 if you are married filing jointly. And if you have higher education loans, there’s even better news: The interest paid on your loans is deductible if your balance exceeds $18,000.
Charitable Contribution Deductions
Household items you packed up for Goodwill and Salvation Army donations, cash donations made to your church, and that check you wrote to the charity downtown are all tax deductible whether you are a homeowner or a renter. You can even deduct half of the amount you spent on Girl Scout Cookies (who knew?). There are many stipulations to charitable contribution deductions, though, so read up on IRS guidelines before claiming your deductions.
Here’s one to get you started: To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. Source: IRS.gov
Small Business Expense Deductions
If you are self-employed, there are several deductions you will be able to make. Save your receipts all year long so that you can deduct your coffee runs, lunches and gas (if you are exclusively putting gas in to go meet with your clients). Then, there is the home office deduction. It is a little known fact that renters can claim the home office deduction; just calculate the percentage of your home dedicated to home office space, and then multiply that percentage by your rent. That figure will be the value of the deduction you can claim. Of course, that space must truly be your home office and the primary place where you do your business.
Renters have several tax breaks available to them; the key is knowing where to look. To learn more about the benefits of renting, contact your local, trusted Property Management Company