Tax deductions remain one of the major benefits of buying a home. If you are thinking about buying a home or on your way to home ownership, you want to make sure you know the tax deductions available to you.
Charles Rutenberg Realty recommends you speak with a professional, but in the meantime here are the top deductions to be aware of during the tax year:
- Mortgage Interest Deduction: One of the TOP tax benefits of home ownership. New homeowners’ mortgage payments are made up almost entirely by interest for the first few years. The ability to deduct this interest can result in a healthy reduction in tax liability.
- Home Improvement Loan Interest Deduction: The interest on home equity loans used for “capital improvements” to a home can also be a tax deduction such as adding square footage, upgrading components of the home, or damage repair from a natural disaster.
- Private Mortgage Insurance (PMI) Deduction: Homeowners who can’t make a 20% down payment are usually paying Private Mortgage Insurance. PMI, can be a few to hundreds of dollars a month, and it’s a large portion of many homeowners’ mortgage payments.
- Mortgage Points/Origination Deduction: Homeowners who paid points on their home purchase can often deduct those points on their tax returns. Points or origination fees, are usually percentage-based fees which a lender charges to originate a loan. A one percent fee on a $100,000 loan would be one point, or $1,000.
- Energy Efficiency Upgrades/Repairs Deduction: Homeowners can deduct the cost of the building materials used for energy efficiency upgrades to their home. This is actually a tax credit, one which is applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.
- Home Office Deduction: Often cited as a deduction that increases your likelihood of being audited. This deduction, when used correctly, is just as safe as any other. Homeowners deduct a percentage of their mortgage, utilities, and repair bills in direct proportion to the amount of their home that is dedicated office space.
- Property Tax Deduction: New homeowners often don’t know that their property taxes are deductible. The overall effect is that you don’t pay income tax on money that was spent on property taxes.
If you are buying or selling your home and would like more information contact Charles Rutenberg Realty. We can help.
516-575-7500 or email@example.com
Disclaimer – This is only an informational summary of current tax issues in the news. If you need tax advice, please contact a tax attorney or CPA.
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