A write off is a term often used to refer to an expense that is reported to reduce tax burden. There are numerous types of write offs, including some that relate to the home. Home write offs can apply to various types of residential properties, including condominiums, houses, and apartments. Examples of these write offs include residential office space, mortgage interest, and property taxes.
As telecommuting becomes more popular, there are likely to be more people claiming residential offices among their home write offs. This expense can significantly affect a person’s tax burden. A residential office write off allows a person to claim many of the costs for having and maintaining that area of the home. Such expenses include electricity, heating, and a portion of the rent or mortgage for the residence.
Another of the home write offs that pertains to running a residential business is a guard dog. If, for example, a person keeps inventory or valuable goods that pertain to her business on the property where she lives, she may get a guard dog as a means of security. The costs of caring for the animal may be deducted from a person’s taxes.
One of the biggest home write offs is mortgage interest. When a person makes her monthly mortgage payment, generally, a portion goes toward repaying the loan and a large portion goes toward the interest on the loan. A person cannot write off the portion that goes toward repayment. However, she can deduct the amount which she pays that goes toward interest. People with extremely expensive homes may find that there is a limit on how much they can deduct.
Interest write offs are not limited to first mortgages. Those who have taken a second mortgage on their homes may be able to deduct the interest they pay. The same rule applies to home equity loans and lines of credit. In all of these instances, however, there may be some restrictions if the debt on the property exceeds the property’s value.
It may be mandatory for homeowners to pay property taxes, but there is a way to use those payments in a beneficial way. To do so, a person can write them off when she files her income taxes. For many people, property taxes are included in their loan payments. This leads some people to falsely believe that they can only write off their personal property taxes as long as they are paying a mortgage. Actually, a person can write off personal property taxes as long as she is the owner of the home.