Owning a house makes you a boss as a woman. Statistics show that 11 million homes in the US are owned by single men, compared to 8 million for their male counterparts. That’s surprising, considering men earn more than women in the country. But home ownership brings some challenges, and taxes make one of them.
But don’t let those pesky forms and dues deprive you of the joy and pride of owning a home. You can find a wealth of valuable tools and information online. This includes everything from free tax bracket calculators to helpful YouTube videos. In fact, we have a few valuable tips of our own to help you navigate the tax maze and maximize your savings and ensure that tax bills don’t eat up your hard-earned money.
Here are a few tips to ensure that tax bills don’t eat up your hard-earned money.
Know your deductions
When it comes to tax bills, deductions are your secret weapon. Whether you use your home for residential or commercial purposes, you can claim deductions for items like mortgage interest. You can even get them for home office expenses if running your business from home.
These deductions can lower your taxable income and cut your bills. So keep track of all those receipts to claim the dues while filing taxes.
Familiarize yourself with the sale rules
If you plan to sell your home, know the rules relating to capital gains tax. The good news is that you may be eligible for capital gains exclusion if you’ve lived in the property for at least two out of the last five years.
It means you need not pay taxes on the profit from selling your home (up to a limit). That can translate into significant savings down the road.
Consult an expert
Taxes can be confusing, even more for ladies who hardly know the implications they have on home ownership. Experts at ray tax recommend consulting an expert if you feel overwhelmed or unsure about handling your taxes.
They can guide you about savings, answer your questions, and help you make wise investment decisions if you are in the commercial domain. Their expertise might cost you a little extra, but they are worth the price as you get peace of mind and potential savings.
Consider forming an LLC for rentals
There’s a lot to celebrate for women looking to explore the world of rental properties. But ensure safeguarding yourself from tax woes. Consider forming a limited liability company (LLC) from the outset.
Since it is a separate legal entity, you can shield your personal assets from potential liabilities if something goes wrong for your rental business. Plus, you may get some deductions for certain expenses for your rental property, such as repairs and maintenance.
Taxes can be painful when it comes to the paperwork. But staying organized will make your life easier when the tax deadline is around the corner. Create a system to track your important documents, like mortgage statements, receipts for home improvements, and property tax bills.
Keeping everything in one place (a physical folder or a digital file) enables you to access them when needed.
The taxes on home ownership shouldn’t be a burden for women. All you need to do is be aware and prepared for the deadlines. Follow these tips to cover both fronts.