Tax season can be overwhelming, but if you’re a homeowner in Colorado, there are opportunities to maximize deductions and credits while staying compliant with tax regulations. Understanding how homeownership impacts your taxes can help you save money and make smarter financial decisions. Let’s break down what you need to know.
1. Mortgage Interest Deduction
One of the biggest perks of owning a home is the ability to deduct mortgage interest on your taxes. If you have a mortgage on your primary or secondary home, you may be able to:
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Deduct interest paid on loan amounts up to $750,000 (for loans taken after December 15, 2017).
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Claim this deduction if you itemize rather than take the standard deduction.
Be sure to check your Form 1098 (Mortgage Interest Statement) from your lender to see how much interest you paid last year.
2. Property Tax Deduction
Colorado homeowners can also deduct a portion of their property taxes, but there’s a cap. Here’s what you should know:
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Homeowners can deduct up to $10,000 in state and local taxes (SALT), including property taxes.
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If you live in a high-value area, you might exceed this cap, so consult a tax professional to strategize deductions.
3. Capital Gains Tax Exclusions
If you sold your home last year, you may qualify for an exclusion on capital gains taxes. Here’s how it works:
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You can exclude up to $250,000 in profits if filing single or $500,000 if married filing jointly.
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To qualify, you must have lived in the home for at least two of the last five years before selling.
This can be a major tax break for homeowners looking to upgrade or relocate!
4. Energy-Efficient Home Tax Credits
Thinking of making your home more energy-efficient? You might qualify for federal and state tax credits:
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Federal Residential Energy Efficient Property Credit – Covers solar panels, geothermal systems, and more.
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Colorado’s Energy Rebates & Credits – Homeowners installing energy-efficient appliances or solar panels may qualify for rebates and tax incentives.
Check with your local utility provider for additional rebate programs.
5. Home Office Deduction (For Remote Workers & Self-Employed)
With more people working from home, the home office deduction can be a valuable tax benefit. However, it’s only available if you’re self-employed or a business owner. Here’s what you need to know:
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The workspace must be used exclusively for business.
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You can deduct expenses related to rent, utilities, internet, and home maintenance based on the square footage of your office.
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The simplified method allows you to deduct $5 per square foot, up to 300 square feet.
6. Mortgage Points Deduction
If you purchased or refinanced a home last year and paid discount points to lower your interest rate, you may be able to deduct those costs. Mortgage points can be deducted in full for the year paid or spread out over the life of the loan.
7. Colorado-Specific Property Tax Relief
Colorado offers property tax relief programs for certain homeowners, including:
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Senior Property Tax Exemption – Available for homeowners 65+ who have lived in their home for at least 10 years.
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Disabled Veteran Exemption – Qualifying veterans may receive a property tax exemption on a portion of their home’s value.
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First-Time Homebuyer Programs – Some tax-advantaged savings plans and grants help first-time buyers afford a home while providing tax incentives.
Visit the Colorado Department of Revenue website to see if you qualify for these programs.
Final Thoughts
Tax season doesn’t have to be stressful! By understanding the deductions and credits available to homeowners in Colorado, you can potentially save thousands of dollars. If you’re unsure which tax benefits apply to you, consider speaking with a tax professional to maximize your savings.
Contact Us
🏡 Moxie Property Group
📞 (303) 578-1220
💻 www.MoxiePropertyGroup.com
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