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Owning a home in Florida comes with tons of perks! From providing a beachfront haven for your family to increasing your net worth, the perk that is on everyone's mind is the tax benefits of homeownership. There are an array of Florida homeowner tax deductions that can add up to big tax savings if you itemize your 2024 income tax return.
Continue to read to find out the best tax benefits for Florida homeowners on the Forgotten Coast of Florida.
Mortgage Interest
Mortgage interest is a part of your monthly mortgage payment. If you are the primary borrower–the person legally obligated to the debt–then you might be able to deduct mortgage interest on your federal tax return. To qualify as being deductible, the interest must be on a loan for your primary residence or a second home. The deduction is available whether it's a first or second mortgage, home improvement loan, home equity loan, or a refinanced loan. There are amazing benefits for military homeowners in Florida as well! If you receive a housing allowance that isn't taxable, you can still deduct your mortgage interest without reducing your deduction by your nontaxable allowance.
Real Estate Property Taxes in Florida
Both state and local property taxes are deductible in Florida, regardless of whether they're paid through an escrow account as part of your mortgage payment, or paid directly to the taxing authority. Military members receiving a housing allowance that isn't considered taxable can deduct real estate taxes without reducing your deduction by your nontaxable allowance.
Closing Costs and Points
There are select costs that can appear on your closing statement that are deductible, including the following:
- Points, or loan origination fees, are paid when obtaining your mortgage, including any points the seller may have paid for you. Typically, you can deduct the full amount of points of your primary residence, as the amount will be shown on your settlement statement.
- Prepaid mortgage interest that appears on your settlement statement.
- Prepaid property taxes are paid at closing.
Home Expenses You Cannot Deduct
Are you wondering if you can deduct other costs of homeownership? For your reference, here are the following costs that are NOT deductible on your federal income tax return:
- Mortgage insurance premiums, a benefit that has expired for all premiums paid after December 31, 2021.
- Homeowner's insurance premiums.
- Fire insurance premiums.
- Principle payments made on your mortgage.
- Title Insurance.
- Utilities.
- Homeowner's association dues and fees.
If You Sold A House in 2023
If you have previously sold a house in 2023 for more than you paid or the "basis," that difference is considered a capital gain and must be reported on your taxes. If that home was your primary residence for at least two of the five years before selling it, you can exclude up to $250k of profit. For most Floridians, this means you won't be taxed on the profit from a home sale. If you need help to determine your basis so you know if you had capital gain or loss, the basis includes factors like your original purchase price, certain closing costs, and certain improvements made to the property while you owned it. Always defer to consulting with your tax professional or tax software for assistance.
The Bottom Line
With changes being made to your income tax deductions every year, it is important to stay in the know. For some, it may be more beneficial to take the standard deduction versus itemizing deductions on your federal income tax returns. While priding ourselves on being knowledgeable on all things home-related, no one is ever truly a tax expert. Consult with a tax advisor to fully understand current tax laws, and tax deductions available to Florida homeowners, and compare the value of itemizing your taxes or taking the standard deduction.
Interested in owning your own home and reaping the benefits of homeownership, or looking for your next dream home? That is the area of expertise for professionals at Coastal Realty Group to sit down with you, discuss your needs, and help you find the Forgotten Coast of Florida home of your dreams today!
