Save More, Stress Less: Tax Deductions Every California Homeowner Should Consider + The Extension for Filing to October

As a homeowner in California, you have a number of tax deductions that you may be able to take advantage of when you file your taxes. Additionally, due to the recent severe winter storms, the California Franchise Tax Board has announced an extension of the 2022 tax filing deadline to October 16, 2023 (but you may still have to file an extension**). This extension provides Californians with additional time to prepare their taxes and take advantage of any available deductions.

Here are some of the tax deductions that you should consider if you own a home (in California) when filing your taxes.

1. Mortgage interest deduction: This is perhaps the most well-known tax deduction for homeowners. If you have a mortgage on your home, you can deduct the interest you pay on that mortgage from your taxable income. This deduction can be a significant tax break, particularly in the early years of your mortgage when the majority of your payments go toward interest.
   
   
2. Property tax deduction: Homeowners can also deduct the property taxes they pay on their homes from their taxable income. This deduction can be particularly valuable for homeowners who live in areas with high property taxes.
   
   
3. Home office deduction: If you use a portion of your home as a home office, you may be able to deduct some of the costs associated with maintaining that office, such as utilities, repairs, and maintenance. To qualify for this deduction, you must use the home office exclusively for work purposes.
   
   
4. Home improvement deductions: Homeowners can deduct the cost of certain home improvements, such as adding a new roof or renovating a kitchen or bathroom, from their taxable income. It's important to keep detailed records and receipts of all home improvement expenses to support any deductions taken on your tax return.
   
   
5. Moving expenses deduction: If you move because of a job, you may be able to deduct some of your moving expenses, including the cost of hiring a moving company, renting a truck, and transporting your belongings.
   
   
6. Energy-efficient home improvement deductions: Homeowners who make certain energy-efficient upgrades to their homes may be eligible for tax credits or deductions. For example, installing solar panels or solar water heater may qualify you for a tax credit.
   
   
7. Home equity loan interest deduction: If you have taken out a home equity loan or line of credit, you may be able to deduct the interest you pay on that loan from your taxable income.
   
   
8. Casualty and theft losses deduction: If your home is damaged or destroyed by a natural disaster or theft, you may be able to deduct the loss from your taxable income.

It's important to note that the rules around each deduction can be complex (including potential caps), and not all homeowners will be eligible for all of these deductions. Additionally, California has its own state tax laws and regulations that may differ from federal tax laws.

As you prepare to file your taxes, it's important to take advantage of any available deductions and credits to lower your tax bill. Please consult a tax professional to make sure you understand your situation and what deductions you can make. And don't forget, with the California extension of the 2022 tax filing deadline, you may have extra time to make sure you're taking advantage of all available deductions and filing your taxes accurately and on time.

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Links:

FTB California Winter Storm Tax Relief

IRS Announces Tax Relief for Victims of Severe Winter Storms Flooding Landslides and Mudslides in California

** “If, for some reason, you weren't able to file your federal tax return on time, hopefully you requested an automatic six-month tax extension to October 16, 2023, by filing Form 4868 or making an electronic tax payment. To get an extension, you had to act by the original due date for your return, whether that was April 18 or some other date. Keep in mind, however, that an extension to file doesn't extend the time to pay your tax. If you didn't pay up by your original due date, you'll owe interest on the unpaid tax and could be hit with additional penalties for filing and paying late.

Also note that special tax extension rules apply for Americans living abroad and people serving (or who served) in a combat zone or contingency operation. As a result, they might have more time beyond April 18 to file their 2022 tax return and pay whatever tax they are expected to owe, and they could receive an extension past October 16.”