Trim Your Tax Bill: 5 Must-Have Deductions for Tennessee Homeowners

Last Updated on January 21, 2025 by Patricia Omishakin

Owning a home in Tennessee comes with many benefits, including opportunities to save money on your taxes. By taking advantage of specific deductions, you can reduce your tax liability and keep more money in your pocket. Let’s dive into the top 5 tax deductions every Tennessee homeowner should know.

1. Mortgage Interest Deduction

One of the biggest tax benefits of homeownership is the mortgage interest deduction. You can deduct interest paid on loans up to $750,000 for your primary or secondary home. This deduction can significantly lower your taxable income, especially during the early years of your mortgage when interest payments are higher.

💡 Pro Tip: Keep a copy of your Form 1098 from your lender to claim this deduction easily.

2. Property Tax Deduction

Tennessee homeowners can also deduct property taxes paid on their homes from their taxable income. You can deduct the full amount of property tax paid on your primary and secondary homes. However, keep in mind that there is a $10,000 cap on the combined deduction for state and local taxes, including property taxes.

3. Home Equity Loan Interest Deduction

Tennessee homeowners can deduct the interest paid on home equity loans or lines of credit up to $100,000. This deduction applies to both your primary and secondary homes. However, you must use the loan or line of credit for home improvements, repairs, or to purchase the property.

4. Energy Efficiency Deductions

Tennessee homeowners can also take advantage of tax deductions for energy-efficient improvements made to their homes. These deductions include:

• 10% of the cost of energy-efficient windows, doors, and skylights, up to $200
• 10% of the cost of insulation and sealing materials, up to $500
• Up to $300 for the installation of high-efficiency heating and cooling systems

5. Home Office Deduction

If you use a part of your home regularly and exclusively for business purposes, you may be eligible for a home office deduction. This deduction allows you to deduct a portion of your home expenses, such as mortgage interest, property taxes, and utilities, as a business expense.

Conclusion

Owning a home in Tennessee comes with numerous tax benefits that can help lower your overall tax liability. The top 5 tax deductions for Tennessee homeowners include the mortgage interest deduction, property tax deduction, home equity loan interest deduction, energy efficiency deductions, and home office deduction. By taking advantage of these deductions, you can reduce your taxable income and keep more money in your pocket.

FAQs

Q: Can I deduct property taxes on multiple homes in Tennessee?
A: Yes, you can deduct property taxes on both your primary and secondary homes in Tennessee.

Q: What is the maximum amount of the mortgage interest deduction?
A: The maximum amount of the mortgage interest deduction is $750,000 for loans taken out after December 15, 2017.

Q: Can I deduct the interest paid on a home equity loan for any purpose?
A: No, you can only deduct the interest paid on a home equity loan or line of credit if the loan is used for home improvements, repairs, or to purchase the property.

Q: How do I claim energy efficiency deductions on my tax return?
A: You can claim energy efficiency deductions on your tax return by completing IRS Form 5695.

Q: How do I qualify for the home office deduction?
A: To qualify for the home office deduction, you must use a part of your home regularly and exclusively for business purposes.

This article provides a general overview of tax deductions for Tennessee homeowners and is not intended as legal or financial advice. Tax laws are complex and change frequently. For advice tailored to your specific situation, please consult a certified tax professional or financial advisor.