If you’re a renter, you might be wondering whether it’s possible to obtain some kind of tax break for your rental payments. Depending on the state you reside in and your job, it might still be possible to secure some considerable write-offs as a tenant. Here’s a list of areas where you might obtain deductions.
Home Office
If you have a home office that functions solely for business, you can allocate a portion of your utilities, rent, renter’s insurance, and other costs as a tax deduction. The space in the unit you write off should only be for business (no claiming the living room or kitchen).
While you can’t deduct any rent paid on the space where your home office is situated, you can deduct several of the items used, including printers, ink, laptops, and other office supplies necessary for work.
If you telecommute, you need to purchase these items to accomplish your job properly. Nevertheless, be careful and consult your accountant because you must follow certain guidelines.
You calculate the deduction by taking the proportion of square footage for your office from the entire unit’s square footage.
You can then deduct that proportion of the rent. You can apply the same formula for the costs of utilities and heating for that percentage.
Voluntary contributions
Contributing to your superannuation fund is one of the most common and easiest tax deductions. Everyone can make this deduction irrespective of home ownership status. This way, you’ll not only lower your tax liability but also set yourself up for a comfortable retirement.
Military Service
Since military families are frequently on the move, it’s common for them to be renters. If you’ve served overseas, it’s possible to obtain a tax offset. This implies that the tax amount paid on your revenue will decrease greatly.
Federal Deductions
The fact that renters can’t deduct their rent payments from their federal revenue taxes is disappointing. However, if your lease agreement dictates that you pay property taxes, you can subtract that segment of your rent or any property tax you cover directly.
You could also subtract property losses or cost of property damage from theft, fire, flood, or other natural disasters or accidents as long as your insurance provider doesn’t reimburse you for the losses.
Charitable Contributions
In the event that you donate items such as old clothing to a charitable organization or Goodwill, you can subtract that amount on taxes. Just make sure you obtain a receipt every time you donate and maintain the receipts in your file throughout the year.
In case you forget the receipt, you could still claim a donation on the taxes by carefully establishing the worth of the items you’ve donated.
Financing Points
If you opt to get out of a rental into a home, you can subtract the points you pay for funding. Points are fees that mortgage companies charge to give purchasers lower interest rates. If you’re buying a home, points might be termed loan origination fees. You can find point fees on your settlement statement.
Final Thoughts
Homeowners obtain some excellent tax breaks. They can write off energy-saving improvements, mortgage interest, and other stuff that renters can’t cash in on. However, it doesn’t imply that you can’t obtain these tax breaks because you’re a renter.
For more information on tax benefits to renting in Houston, contact us at Apartment Agents or leave a message.