Tax Deductions for Homeowners

Purchasing a home is an exciting and significant milestone in many people’s lives. Not only do you get to move into a new space that you can call your own, but there are also certain tax deductions that come with being a homeowner as well. If you plan on buying a home in the near future, it’s important to be aware of these tax deductions for homeowners so you don’t miss out on any potential savings. Read on to learn more.

Tax Deductions for Homeowners |

Tax Deductions for Homeowners to Claim

Mortgage Interest Deduction

The most common type of tax break for homeowners comes from the mortgage interest deduction. This deduction allows homeowners to deduct the amount of interest they pay annually on their mortgage from their taxable income. To qualify for this deduction, your loan must have been taken out after December 15th, 2017, and must not exceed $750,000. Additionally, the loan must be used to purchase, build or improve your primary residence or second home.

Property Taxes Deduction

When you purchase a home, one of the costs associated with owning it will be property taxes. Depending on where you live, this cost can be quite high and can add up over time. Luckily, if you itemize deductions when filing your taxes, you may be able to deduct some or all of what you paid in property taxes that year up to $10k (or $5k if married filing separately). Keep in mind that this deduction is not available if you choose to take the standard deduction instead of itemizing deductions when filing your taxes.  

Points Deduction

Tax deductions for homeowners includes a points deduction. When purchasing a home through a mortgage loan, sometimes lenders will require borrowers to pay points at closing as part of their agreement. Points are essentially prepaid interest payments and typically equate to 1% of the borrowed amount. These points can usually be deducted over time as long as certain criteria such as taking out the loan for your primary residence are met.

Purchasing a home is an exciting event that comes with financial responsibility and potential savings when it comes time to file your taxes each year via deductions like mortgage interest, property taxes, and points deductions among others. The key is researching these options before signing any paperwork so that way when it comes time to file your taxes each year, no money goes unclaimed! So don’t wait – start doing your research today!

Contact us to schedule your tax appointment.

This information is not intended as legal or tax advice. Cowdery Tax and its representatives does not offer legal or tax advice. We offer services for business bookkeeping, payroll, tax payments, and personal tax filings. We share information that is publicly available. Tax laws may change with or without notice that may alter or change the information contained in this publication.