How to Develop a Smart Tax Plan

Here's how to take advantage of available tax breaks, whether it's on home-related costs or charitable donations.

Instructions

Difficulty: Moderately Easy

1. If you use a mortgage to finance the purchase of your house, maximize home-related deductions by deducting property taxes as well as interest. You can even deduct interest on a second home if your combined mortgage debt is over $1 million.
2. Typically, charitable donations are deductible, so the more you donate, the more tax benefit you can get if your itemized deductions exceed the standard deduction.
3. If you rent out your primary residence or a vacation house for less than 15 days, you need not report the income. And if you convert your home from personal to rental use, you can do a like-kind exchange after converting your home to rental property. Or, if you sell the property at a loss, you can deduct the loss because the property is considered a business asset.