Buying a new home was probably your best financial move in 2016. Now you can continue to reap the financial benefits of homeownership in the new year and take some steps to help protect your investment.
Follow these tips to position yourself going forward to be a happier homeowner with a great house and a few extra bucks in your pocket while being proactive financially in the coming months.
The Bankrate Daily
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Get a property tax break
In a number of states, you can benefit from a homestead exemption, which gives you a break on your property taxes.
“This differs vastly not only from state to state, but from county to county as well,” says Bill Golden, an independent real estate agent with RE/MAX Atlanta Cityside.
Some states allow those who have their principle residence in the state to file for a homestead exemption, while others only offer the property tax break to certain groups, such as those over the age of 65 or disabled military veterans.
Along with being a place to call your home, one of the biggest benefits of buying a house is the federal income tax deductions it provides.
“Take advantage of every tax benefit you can,” says Bill Brown, 2017 president of the National Association of Realtors.
Now is the time to familiarize yourself with the tax deductions, such as the mortgage interest you paid, your real estate property taxes and the points you paid on your mortgage, Brown says.
You can benefit financially if you don’t wait until the last minute to pay your property tax bill, says Henry Grzes, a lead technical manager for the tax section of the American Institute of CPAs.
If the property taxes on your home are due in February, and you pay your bill in December, you can write off the taxes you paid on your 2016 income tax return. At the same time, many jurisdictions will give you a discount if you pay your property taxes before the deadline.
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Earn tax credits for energy efficiency
If you made your home more energy efficient in 2016, you can earn a federal tax credit, Grzes says.
For example, if you installed a solar electric system or solar water heater by the end of 2016, you can claim a credit when you file your taxes next year.
You also can earn a tax credit if you’ve installed energy efficient doors, windows or skylights. These tax credits are scheduled to end after 2016.
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Trim your utility bills
Those energy efficiency improvements you make not only can help cut your federal income tax, they also can help cut your utility bills.
In many places, you can schedule an appointment to have your utility’s inspectors visit your home, and they can assess what changes you should make to improve your home’s energy efficiency and lower your heating and cooling costs, Golden says.
Your utility company or local government might even provide financial incentives to aid you in making such improvements.
In the same way you have updated your new home, you’ll also need to update your homeowners insurance policy to reflect those changes.
“Common upgrades like installing hardwood floors, updating a kitchen or bath or adding a deck can all affect the cost to rebuild,” says Angi Orbann, second vice president of property design and strategy at Travelers.
That’s why it’s important to check with your insurance agent to see if you need to increase the coverage on your house.
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Protect your home
Because you want to protect your investment as well as your family, you might consider reinforcing your home and installing smart technology that can help keep your house and your loved ones safe.
Making certain modifications to your home can make it better able to withstand a natural disaster, earthquake or hurricane.
You can add such things as smart smoke detectors, fire alarms and security systems, which use your smartphone to alert you of trouble.
Be sure to notify your insurer once you’ve made these changes. By adding that extra protection, you might earn a discount on your homeowners policy, Orbann says.