Tax Benefits For Florida Homeowners
Owning a home in Florida offers numerous advantages, from providing a sanctuary for your loved ones to enhancing your financial portfolio. As tax season approaches, many are considering the tax incentives associated with homeownership.
Great news! Florida homeowners have access to a variety of tax deductions that can lead to significant tax savings when itemizing their 2023 income tax return.
Based on the official IRS Publication 530 and insights from TurboTax, here's a breakdown of the tax benefits available to Florida homeowners who file a Schedule A for Itemized Deductions:
Mortgage Interest
Your monthly mortgage payment includes mortgage interest. If you're the primary borrower, you might qualify to deduct this interest on your federal tax return.
For homes bought after December 15, 2017, interest on the initial $750,000 of mortgage debt ($375,000 if married filing separately) is deductible. For homes acquired before this date, the limit is $1 million.
This deduction applies to interest on loans for your main or secondary residence. It's available for first or second mortgages, home improvement loans, home equity loans, or refinanced loans. The stipulation from last year, which mandates that the loan must be used to purchase, construct, or significantly upgrade your home for the interest to be deductible, remains valid for the 2023 tax year.
Florida's military homeowners have more good news! Even if you receive a non-taxable housing allowance, you can still deduct your mortgage interest.
Moreover, if you were issued a qualified Mortgage Credit Certificate (MCC) from your local or state government when securing your mortgage, you might qualify for the mortgage interest credit. It's advisable to consult a tax expert for guidance. Without an MCC, this deduction isn't available, as obtaining the certificate post-home purchase isn't possible.
Real Estate Property Taxes in Florida
In Florida, state and local property taxes are deductible, whether they're paid via an escrow account with your mortgage payment or directly to the tax authority.
If you acquired a new home in Florida in 2023, the real estate taxes paid at closing are also deductible. These won't appear on the 1098 tax form from your mortgage lender, so keep your Settlement Statement accessible.
The combined deduction for state and local taxes, including property taxes, caps at $10,000 ($5,000 if married filing separately).
Military personnel with a non-taxable housing allowance can also deduct property taxes without the deduction being offset by the non-taxable allowance.
Closing Costs and Points
For those who bought homes in 2023, certain Florida tax deductions related to closing costs might apply. Deductible costs from your Settlement Statement include:
Points or loan origination fees are paid during your mortgage process.
Prepaid mortgage interest is listed on your Settlement Statement.
Prepaid property taxes at closing.
Home Improvements for Medical Reasons
If you undertook home modifications in 2023 for medical care, a portion might be tax-deductible. For 2023, expenses exceeding 7.5% of your adjusted gross income (AGI) are deductible.
Home Expenses You Cannot Deduct
For clarity, the following homeownership costs are NOT deductible for the 2023 tax year:
Mortgage insurance premiums
Homeowner's insurance premiums
Principal mortgage payments
Utilities
Homeowner's association dues and fees
Florida Homestead Exemption
A significant advantage for Florida homeowners is the Florida Homestead Exemption. This isn't an income tax deduction but remains a valuable homeownership perk. The Florida Homestead Exemption can reduce the taxable value of your primary residence by up to $50,000, translating to lower property taxes.
For more details on the homestead exemption, visit Florida Revenue or your county property appraiser's website.
If You Sold a House in 2023
Selling a home in 2023 might have tax implications. If the selling price exceeds your purchase price or "basis," the difference is a capital gain, which must be declared on your taxes.
Tax deductions evolve annually, so staying informed is crucial. While we're well-versed in home-related matters, we aren't tax specialists. We always advise consulting with a tax professional to grasp current tax laws and evaluate the benefits of itemizing your taxes or opting for the standard deduction.
Eager to own your first home or searching for a new one? That's where The Sipp Home Group shines! We're eager to understand your requirements and guide you to your dream Florida home. Discover more about us and connect with a Real Estate Expert by exploring The Sipp Home Group website or reaching out to us at (407) 820-7016.
