It pays to own a home in the United States. In addition to living the “American Dream,” home ownership offers excellent tax benefits. The following are the five largest tax deductions you may be eligible for.
5 Tax Deductions To Look For If You Are A Homeowner
- Mortgage Interest
Did you know that as a homeowner, you can write off the majority of the interest paid on a mortgage or home equity line of credit? Your mortgage interest is perhaps the most important tax deduction available to you, particularly if your mortgage was originated in the last few years and the bulk of your monthly payments are going toward interest. If you own a second home, RV, or boat with cooking and sleeping quarters that you pay mortgage interest on, you can write that off as well. As long as you use the secondary residence at least two weeks out of the year, you can rent it out and still be eligible for a tax deduction on the mortgage interest.
- Property Taxes
Property taxes represent another considerable deduction for homeowners. Be sure to have your tax bills handy when you file your tax returns since in most cases you can deduct almost the entire amount.
- Mortgage Points
If you purchased or refinanced your primary residence in the last calendar year and paid points in exchange for a lower interest rate, you can deduct the amount you paid. Speak with your accountant or financial advisor about the difference between refinancing and purchase points as well as home equity lines and second homes.
- Mortgage Insurance
If the loan-to-value ratio on your home is greater than 80 percent and you are required to pay personal mortgage insurance (PMI), you may be able to deduct all or a portion of that amount. Your gross income plays an important role in just how much of a deduction you qualify for, and homeowners with a total gross income of greater than $109,000 will not be eligible.
- Home Improvements
If you are paying interest on a home improvement loan, you may be able to write it off. You may also be able to deduct money spent on energy-saving appliances as well as new windows and doors.