Now that you’ve taken the big step toward the American dream of becoming a homeowner, you need to know what tax deductions for homeowners are out there. The good news is there are plenty of home related expenses you can deduct, whether you live in a single-family, town house, condo or mobile home. The bad news is, if you want to take complete advantage of your homes deductions, it can get more completed and you may need the help of a professional.
However, many homeowners believe the effort that goes into itemizing is worth the time. So, if you believe that itemizing is right for your tax situation, we have some homeowner tips for what you can deduct, things you can’t and how to get the most from your taxes.
Mortgage interest will be your largest tax break. For most homeowners, the bulk of your monthly mortgage payment goes toward interest. So, it’s all deductible, unless your loan is more than $1million. Loans over $1million are limited on tax deductions.
If you refinanced your home or got an equity line of credit for less than $100,000, it is fully deductible. And, if you own multiple properties, your mortgage interest is also fully deductible.
If you paid points to get a better rate on your home loan, you will qualify for a tax break. You can deduct the points you paid in the year you paid them if your loan was to maintain a home or build a home. Furthermore, if you paid points to refinance your home loan, you are eligible for a tax break. This will also apply to home equity lines of credit.
Other Big Deductions
Property taxes are another big deduction you can use. In many cases, your property taxes are paid to an escrow account and paid out annually. You should see this amount in your yearly tax statement from your mortgage company. So, as long as you own your home, you can use these taxes as an annual deduction.