
What Tax Deductions or Credits Can You Take as a Renter?
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By itemizing deductions for real estate taxes and mortgage interest, property owners are usually eligible for some IRS tax breaks that others can't claim.So, what about renters? TAX SOFTWARE DEALS OF THE WEEK H&R Block Free Simple Tax Returns eFile: $0 (save $0) TurboTax Deluxe 2024 (Federal and State, PC/Mac Download): $56 (save $24) TurboTax Premier 2024 (Federal and State, PC/Mac Download): $83 (save $32) TaxSlayer Classic Plan: $28 (save $10) Deals are selected by the CNET Group commerce team, and may be unrelated to this article. This story is part of Taxes 2025, CNET's coverage of the best tax software, tax tips and everything else you need to file your return and track your refund. Don't expect much tax relief if you're handing over a chunk of cash to your landlord each month. Though most renters aren't eligible for a tax break, some rental credits do exist depending on where you live, your income, your age and a few other factors. If you qualify for a renter's credit, it may not be an overwhelming amount of savings, but every dollar counts in today's expensive market.Here's what to know if you're renting your home.Do renters qualify for a federal tax credit?On a federal level, the IRS doesn't offer a universal tax incentive for all renters.The foreign housing deduction is the closest thing to a federal deduction available for renters. So, if you're reading this and aren't living in the US, that's good news."Self-employed US taxpayers living abroad who qualify for the foreign earned income exclusion may qualify to deduct a portion of their housing expenses, including rent, incurred while living in a foreign country," said Logan Allec, CPA and owner of Choice Tax Relief.But that doesn't apply to many people. According to the Association of Americans Resident Overseas, around 5.5 million Americans live abroad.Can renters take the home office deduction?If you run a business and use part of your rental unit as a place for business, you can see if you qualify for the home office deduction."If a renter has a space in their home that they regularly and exclusively use for their business, they can deduct a portion of their annual rent expense via the home office deduction," Allec said."Exclusively" is the critical part there, though. You can't call your kitchen a home office just because you set up your laptop at the counter in the morning. Most of the time, W-2 remote workers won't qualify for the deduction.Do states offer any tax deductions, credits or rebates?While there may not be much you can do on your federal taxes to offset your rental payments, your state tax return may differ. According to Intuit, state tax benefits are available in nearly half the country.Here's a rundown of where renting comes with some potential tax benefits:ArizonaCaliforniaColoradoConnecticutHawaiiIndianaIowaMaineMarylandMassachusettsMichiganMinnesotaMissouriMontanaNew JerseyNew MexicoNew YorkNorth DakotaPennsylvaniaRhode IslandUtahVermontWashington, DCWisconsinHow can you qualify for tax relief as a renter?Even if your state offers the benefit, not all renters qualify for a renter's deduction or credit. The specific qualifications are often based on income or age, and they vary depending on the state, according to Allec.In some places, your income needs to be extremely low to qualify. In New York, for example, you cannot make more than $18,000. Other state programs are geared toward senior citizens. In Montana, for instance, renters need to be at least 62 years old to qualify.Some states have more lenient requirements. In Indiana, every renter can deduct up to $3,000 (or the actual amount of rent paid in the year, whichever is less), regardless of age or annual earnings.How much is a renter's tax credit worth?Some states offer generous tax credits to renters, such as Pennsylvania and Minnesota, while others are notably low.California, one of the most expensive states in the country, offers a renter's credit of just $60 for individuals and up to $120 for couples filing jointly. That's not worth much if you're renting a place in San Francisco, where the average monthly tab is more than $3,300, according to RentCafe.How do you claim a renter's tax credit on your state return?Depending on where you live, taking advantage of your state's tax credit, deduction or rebate for renting will be different.For example, in California, you'll claim the credit when filing your state return. In other states, however, you may need to submit an application with the Department of Revenue. Be mindful that the application deadlines may not follow federal tax deadlines. In Connecticut, for example, renters apply for the credit between April 1 and Sept. 30.To prepare for the 2024 tax filing season, check out CNET Money's tax explainers and tax software reviews.
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