As the year comes to a close, it’s the perfect time for homeowners in Columbia, Missouri, to take stock of their finances and prepare for the upcoming tax season. A little end-of-year planning can help you maximize your tax benefits, increase your home’s value, and set you up for financial success in the new year. Here’s a checklist to help you make the most of your year-end financial review.
1. Review Your Mortgage Interest Payments
Mortgage interest is often one of the largest tax deductions available for homeowners. Before the year ends, request a statement from your lender showing the total interest paid in the current tax year. This can be claimed as a deduction if you itemize your taxes. It’s also helpful to confirm that your mortgage provider has your current contact information for tax documents you’ll need in the spring.
2. Check Your Property Tax Payment Status
In Missouri, property taxes are due by December 31st. Confirming that your taxes are paid on time can help you avoid penalties and ensure that you’re eligible for any deductions. If you paid property taxes through an escrow account, you’ll receive a summary from your lender to help you claim your deductions.
3. Make Any Necessary Home Repairs or Improvements
If you’ve been considering energy-efficient upgrades, like installing new windows, upgrading insulation, or adding a solar panel system, the end of the year is a great time to act. Many energy-efficient improvements can qualify for federal tax credits. Additionally, if you plan to sell your home in the future, these updates can increase your property’s value and appeal to potential buyers.
4. Evaluate Your Home Insurance Coverage
Review your homeowner’s insurance policy to ensure you have adequate coverage for your property. Make sure your policy covers any recent upgrades, renovations, or other changes to your home’s value. It’s also wise to check for any discounts or bundling options that might lower your premiums. Updating your policy now can also help you avoid unexpected costs in the new year.
5. Consider Refinancing Options
Mortgage interest rates fluctuate, and if rates have dropped significantly, it might be worth exploring a refinance. Refinancing could reduce your monthly payment or allow you to pay off your mortgage sooner. However, refinancing costs money upfront, so weigh the potential savings carefully. A financial advisor or mortgage lender can help you decide if refinancing is a smart option.
6. Organize Home Office Deductions
If you work from home, you may be eligible for a home office deduction, provided you meet the IRS requirements. To qualify, the space must be used exclusively for business purposes. Review your expenses and set up a dedicated area in your home if you haven’t already. Track your home office expenses to maximize this potential tax benefit.
7. Maximize Charitable Contributions
Columbia homeowners who donate to local charities can receive tax deductions for their contributions. Donating to organizations that focus on housing, community development, or other causes you care about can make a difference locally. Keep records of all donations, as they may qualify for tax deductions.
8. Document Moving-Related Expenses
If you moved this year for a new job and meet the IRS distance and time requirements, you may be eligible for a moving expense deduction. Gather receipts for expenses like truck rental, moving supplies, and transportation costs to maximize this deduction.
9. Create or Update Your Will and Estate Plan
Homeownership is a major asset in your financial portfolio, so it’s important to have a clear estate plan. Review your will, update beneficiaries, and consider setting up a trust if needed. Working with an estate planner or attorney can make sure your assets are distributed according to your wishes.
10. Meet with a Tax Professional
Finally, consider meeting with a tax advisor or financial planner. They can help you identify tax deductions and credits that apply specifically to homeowners, like mortgage interest deductions, property tax deductions, and more. A tax professional can also help you strategize for the next tax year and advise on any changes in tax law that may impact your finances.
Wrapping Up the Year with Confidence
By taking the time to review your financial situation now, you can step into the new year with confidence and peace of mind. These small steps not only save you money on taxes but also contribute to your home’s long-term value. Owning a home is one of the biggest investments you’ll make, so a little year-end planning can go a long way toward protecting it.