Alright, welcome another fun episode and this one we're going to talk about how
to write off expenses for your home. So if you are an individual and
if you just have for your regular home expenses, like mortgage,
interest, property taxes, and say repairs and utilities on your house,
I'm going to talk about the expenses you can write off and maybe some
that you can't. But then I'm going to tell you how if you're at
a business owner or investor, how you might be able to write off a
lot more things related. To your house. So on the first side,
if you're just an individual homeowner,
you don't run a business out of it. You're not an investor. It's not
a rental. It's just your home. There are two main types of deductions you
can get for your house. So don't worry
Number one is you can write off your mortgage interest and number two is
you can write off your property taxes and that's really it.
A lot of people know about that. Those are the, that really is the
tax benefit of owning your house. There's a third one.
There's a third one related to your individual house and that's if you sell
it, if you live there at least two years and you sell it,
you can exclude a big portion of capital gain,
about 200, or it's 250,000 for individuals.
That's how you can write off your house. Those are the two main things.
You've got the mortgage interest and you've got the property taxes,
and then you can sell it tax-free, up to $250,000 taxable gain,
or a gain that you can exclude from. From being taxed all together.
So here's where it gets really exciting. In my opinion,
this is where it gets fun, and that's if you are a business owner.
If you work from home, or if you rent out part of your home.
As an investor, and it becomes a rental property.
Because what happens there, a percentage of your house,
it becomes a deduction. Based on how much square footage is used.
So for example, let's say you've got a five bedroom house.
And you're using one of the bedrooms for your office,
you've got your computer in there, you're doing a lot of zoom calls,
or maybe you're making things in the office, or you're storing things in there,
you're using that office that room exclusively for your business.
If you're doing that, about 20% of all your house costs
all of a sudden can become a deduction for your business.
So instead of just writing off mortgage interest and property taxes,
now, you're using one fifth of your house for your business and now you
can write off one fifth of your utilities or one fifth of your,
like your internet and your electric, your electrical and your gas.
And even repairs, and then remember if you do something,
this is another big part of it, if you do some improvements specifically to
that office space, say you redo the carpet or you paint the walls or
you get new furniture, Sure, you do. If you do something in that office
space, that's a 100% deduction,
so it gets a little confusing using all these percentages,
but you can use in this example, 20% of everything,
all your house costs, can be a deduction for your business,
but if it's specifically related to that room,
100% of that can be a deduction for your business.
That's a pretty amazing tool to write things off,
so then that's if you use it as a business and you're using like,
you're renting out part of your house, but there's a lot of people, like
say you, you live in the upstairs and you have a mother-in-law apartment and
you rent out the downstairs. So if you're renting out half of your house,
I know you may have heard that you can't depreciate a house if it's
personal use and that's right, you don't depreciate a house if it is used
personally, but just for that portion. But if you're renting out half of your
house, as a rental property,
you've got all sorts of deductions that open up.
So now again, you can take in that example, 50% of all your deductions
can become a deduction to offset some of your other income.
Investment deduction to offset your rental income,
but then the depreciation, we've talked a lot about this,
like the accelerated depreciation, bonus depreciation,
that half of your house that's a rental property, it could qualify for that.
That's, that's how you write off your house and saving taxes and writing off.
And really one of the best things about it is it's things that you're
paying for these things anyways, you live there,
it's your house, you're paying utilities and the bills. You're paying for them anyways,
but turning it into a tax deduction is just,
just icing on the top. So it's pretty amazing.
So writing off, that's how you write off your house or parts of your
house and get a tax deduction for it.