Many New Yorkers have questions about their tax deductions this time of year. The most common (as you may have guessed)? How to make a tax bill as teensy as possible — or, better yet, how to get a tax refund? For the best advice on your unique financial situation, you should, of course, consult a tax professional well in advance of the April 18, 2023 filing deadline. That said, we polled a couple of pros for their overarching tax advice on making a big refund possible — legally — including mortgage interest deductions and write-offs for your home office. Come on, let’s get working on a tax refund!
Table of Contents
Manhattan Homes for Under $650K on StreetEasyArticle continues below
Hudson Heights
340 Haven Avenue
$399,000
1 |
1
Murray Hill
136 East 36th Street
$499,900
1 |
1
Central Harlem
57 West 127th Street
$597,000
1 |
1
Sutton Place
220 East 54th Street
$395,000
Studio |
1
Kips Bay
305 East 24th Street
$539,000
1 |
1
Murray Hill
320 East 42nd Street
$450,000
Studio |
1
Manhattan Valley
220 Manhattan Avenue
$550,000
1 |
1
Chelsea
166 West 22nd Street
$475,000
Studio |
1
Hamilton Heights
121 Edgecombe Avenue
$595,000
1 |
1
Yorkville
235 East 87th Street
$649,000
1 |
1
Sutton Place
420 East 55th Street
$575,000
1 |
1
Sutton Place
245 East 54th Street
$628,000
1 |
1
Can Mortgage Interest Be Deducted in 2023?
We asked Xintian Wang, a CPA and Senior Tax Manager at Dimov Tax Specialists. His response? “If you own a condo or a co-op in NYC with a mortgage, you can deduct mortgage interest on the first $750,000 of the loan with asingle or married filing jointlystatus.”
But when it comes to getting a tax refund, there’s a twist if you are married and filing taxes separately. You can only deduct interest paid on the first $375,000. Did you take out a mortgage before December 16th, 2017? Here’s some good news. You can deduct interest paid on the first $1 million. However, if you are married and filed separately, the number is reduced to $500,000, Wang says. “Mortgage points you paid also qualify for deductions.”
Deductions apply to second homes, too, says Aaron Smyle, MBA, MST, EA, founder of Manhattan-based Smyle and Associates, LLC. The $750,000 worth of principal limitation was introduced by the Tax Cuts and Jobs Act (TCJA) and will revert to $1 million after 2025, Smyle says.
Brooklyn Homes Under $650K on StreetEasyArticle continues below
Sheepshead Bay
3903 Nostrand Avenue
$425,000
2 |
2
Ditmas Park
385 East 16th Street
$580,000
2 |
1
Coney Island
458 Neptune Avenue
$389,000
2 |
1
Brooklyn Heights
130 Hicks Street
$460,000
Studio |
1
Bay Ridge
7901 Fourth Avenue
$475,000
2 |
1
Kensington
415 Ocean Parkway
$370,000
1 |
1
Brighton Beach
51 Brighton 1 Place
$599,000
3 |
2
Midwood
770 Ocean Parkway
$309,000
1 |
1
Midwood
1171 Ocean Parkway
$349,999
1 |
1
Homecrest
2503 Ocean Avenue
$565,000
2 |
2
Homecrest
2503 Ocean Avenue
$485,000
1 |
1
Brooklyn Heights
44 Remsen Street
$625,000
1 |
1
Can You Get a Tax Refund for Home Office Deductions in 2023?
Unfortunately, W2 employees are no longer able to take a write-off for home offices due to the Tax Cuts and Jobs Act. “If you are self-employed or an independent contractor, you can deduct home office expenses and any expenses that are related to your job,” Wang says.
But getting a tax refund is not as easy as checking a “worked from home” box on your taxes. “If you’re looking to take the deduction, the office portion of your home has to be used exclusively as an office,” Smyle says. The sofa where you eat takeout and watch Netflix won’t cut it. “There’s also a formula for determining the amount to deduct for a home office based on the size of your home. For example, if your home office is 200 sq. ft, and your apartment is 800 sq. ft., your workspace is 25% of your home. Afterward, that percentage is applied to total yearly rent and utilities, or if you own, it’s applied to mortgage interest, maintenance, and utilities.”
If you live in New Jersey and work in New York, you may be worried about having to fork over taxes in both states. You will need to file a New York tax return and pay taxes on income earned in New York. The bright spot? You will get a tax credit for earned income in New York for New Jersey, so you’re not paying state taxes on the same income twice. Phew!
Brooklyn Rentals Under $3,000 on StreetEasyArticle continues below
Prospect Lefferts Gardens
542 Parkside Avenue
$1,800No Fee
1 |
1
Sunset Park
505 62nd Street
$1,972No Fee
1 |
1
Bushwick
649 Hart Street
$2,581No Fee
Studio |
1
Bushwick
649 Hart Street
$2,542No Fee
Studio |
1
Midwood
1414 East 12th Street
$2,825No Fee
1 |
1
Clinton Hill
515 Clinton Avenue
$2,179No Fee
Studio |
1
Flatbush
1554 New York Avenue
$2,600No Fee
2 |
1
Flatbush
1522 New York Avenue
$2,200No Fee
Studio |
1
Bushwick
123 Melrose Street
$2,765No Fee
Studio |
1
Crown Heights
951 Carroll Street
$1,900No Fee
Studio |
1
East Flatbush
1626 Brooklyn Avenue
$2,499No Fee
2 |
1
Stuyvesant Heights
663 Hancock Street
$3,000No Fee
3 |
1
What’s the Deal With Property Tax Deductions for 2023?
“With the ability to work remotely, a lot of people have been out of the city [in recent years] and want to see what they can do to minimize their tax liability,” Smyle says. “Intent is one of the biggest factors determining residency status and a temporary living situation. It would not absolve one from having to pay income taxes here in the city.” Smyle advises being extra careful if you’re trying to change your status to “non-resident” for tax purposes. “There are a lot of items that need to be in place to properly, and ethically, make that claim.”
Wang notes that if you pay real estate tax or property tax, you can add that to your itemized deduction for a potential tax refund. But the total tax deductions, including state and local taxes, are capped at $10,000 ($5,000 if married filing separately) on the Federal side. “For New York purposes, the deductions are not subject to the Federal limit,” she says.
Jersey City Rentals Under $3,000 on StreetEasyArticle continues below
Jersey City
283 Webster Avenue
$2,550No Fee
2 |
1
Jersey City
150 Cator Avenue
$2,500No Fee
2 |
1
Paulus Hook
133 Grand Street
$2,450No Fee
1 |
1
Jersey City
282 Baldwin Avenue
$2,600No Fee
2 |
2
The Heights
60 Cambridge Avenue
$2,100No Fee
1 |
1
Bergen/Lafayette
7 Monticello Avenue
$2,350No Fee
2 |
2
Historic Downtown
266 Erie Street
$2,750No Fee
3 |
1
Jersey City
101 Wilkinson Avenue
$2,400No Fee
4 |
1
Paulus Hook
84 1/2 Morris Street
$2,500No Fee
1 |
1
West Side
225 Monticello Avenue
$2,000No Fee
1 |
1
The Heights
523 Palisade Avenue
$2,800No Fee
2 |
1
Bergen/Lafayette
137 Myrtle Avenue
$2,700No Fee
4 |
1
Are Home Improvements Eligible for Tax credits?
Call it the HGTV effect. It’s possible to write off home equity loan interest if you used the loan for renovations on your place — but only if they’re substantial improvements. Sorry, repainting the bathroom doesn’t count. What’s another way to nab a potential tax credit? If you installed energy-efficient upgrades, including qualifying energy-efficient windows, you can likely apply for a credit of 10% or more. But before doing, please consult with a tax professional.
NYC’s Enhanced Real Property Tax Credit for Renters
If you live in a rental, rejoice! “Renters in New York City may claim a tax credit on their state tax returns,” Wang says. “If you lived in the same apartment or house for at least six months, are a full-year NYC resident, and your household income is below $200,000, you are eligible for a credit up to $500. The credit also applies to taxpayers who own properties and pay real estate taxes.”
If you gleaned nothing else from this article, take this advice from Smyle to heart as you prepare for your possible 2023 tax refund: “As we are approaching year-end, you should start to get your financial documents in order. Remember, shoeboxes are for shoes, so get your receipts itemized and organized.” Spoken like a true tax pro.