Owning a home invokes more than a sense of pride and freedom. It is also a long-term investment opportunity. With tax season here, it is a great time to speak to your tax advisor about the tax advantages associated with homeownership.
Some of the items you should plan to discuss include the following tax breaks commonly available to homeowners.
- Mortgage interest deduction: Interest you pay on a mortgage of up to $1 million – or $500,000 if you’re married filing separately – is deductible when you use the loan to buy, build or improve your home.
- Prepaid interest deduction: Points you paid when you took out your mortgage is 100 percent deductible in the year you paid them.
- Property tax deduction: You can deduct the real estate property taxes you pay each year, as well as any property taxes paid at the time you closed the purchase of your house.
- Mortgage insurance premium deduction: If you had to take out private mortgage insurance, the premium on that insurance can be deducted, as long as your income is less than $100,000 (or $50,000 for married filing separately).
Speak to your preferred tax professional for advice and more specifics about how these deductions and credits could lower your tax bill.
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