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Did you know? If you’re a homeowner, you may qualify for significant breaks on what you owe Uncle Sam. Read on to learn about some common home-related deductions and credits you could enjoy.
To qualify for most of these tax advantages, you’ll need to itemize on your annual tax return. Regulations and restrictions apply. Tax laws may change. Consult with your tax advisor for complete details.
You can typically deduct the interest that you pay on the mortgage for your primary residence. If you paid discount points on your mortgage, those may also be deductible. (Discount points may also be known as loan origination fees, maximum loan charges or a loan discount.) Points are considered prepaid interest by the IRS and generally must be deducted over the life of the mortgage, although in some cases you may deduct the full amount in the year you paid for the points.
Insurance and Taxes
Your homeowner’s insurance premiums are not deductible. However, if you have private mortgage insurance (PMI), those payments usually are deductible. You may also qualify to deduct your property (real estate) tax payments.
Tax credits for energy-efficient home improvements change often, and many have not expired. Currently there is a federal tax credit available for solar energy systems installed by Dec. 31, 2021. In addition, some states offer their own credits, rebates or other savings. For more information, check Energy.gov
There May Be More
There are other home-related factors that could lead to tax reductions. These include:
- Home improvements made for medical reasons, such as installing ramps, handrails or wider doorways
- Expenses related to a home-based business
- Profit or loss from a home sale
- Work-related relocation
- Home-related property losses
To learn more about taxes and your home, review IRS Publication 936
, Home Mortgage Interest Deduction
, and Publication 530
,Tax Information for Homeowners
. And, of course, consult with your tax advisor to make sure you aren’t missing out on other potential deductions and tax advantages.
Need help finding the best option for your unique needs? Let us help. Call us for a free Mortgage consultation (844) 346-4483 or visit us online
Contents of this blog article are intended to provide you with a general understanding of the subject matter. However, it is not intended to provide legal, accounting, or other professional advice and should not be relied on as such. Information may have changed since the publication date. Equal Housing Opportunity