Sunday, March 5, 2017 / by Jessica Holcomb
1. Home Mortgage Interest Deduction - this is one of the biggest tax deductions available. It covers interest paid on loans of up to $1 million, or $500,000 if you are married but filing a separate return.
2. Mortgage Interest Credit - provides another opportunity for home owners to claim a tax break for mortgage interest they paid. If you invest less than 20% as a down payment on your home than you are most likely paying mortgage interest. You can refer to your lending institutions annual statements for the amount you paid.
3. Mortgage Points Deduction - If you paid points to secure a mortgage loan than you may qualify of another great tax break. You would find this amount on your Closing Disclosure from the Title Company you received when you closed on your home.
4. Tax-Free IRA Withdrawals - Saving up for a down payment and closing costs is sometimes the only thing holding you back from buying a home today. The IRS allows you to pull funds from your IRA to help. First-time homebuyers that borrow from their IRA for a down payment do not have to pay the 10% penalty normally applied to withdrawals taken before age 59 1/2. This could also apply to current homeowners because you are an eligible first-time buyer status if you haven't owned a home in two years.
5. Property Tax Deduction - those who itemize deductions on Schedule A are also eligible to deduct real estate taxes paid on the primary residence. When you live in Texas the property taxes can be hefty but it does help balance out things when you get to take advantage of this tax break.
6. Home Improvement Tax Breaks - If you use a home equity loan or other loan secured by your home to finance improvements, the loan will qualify for the same mortgage interest deductions as your main mortgage.
7. Home Energy Tax Credits - here are 2 tax credits that were eliminated as of Jan 1, 2017. That means both credits will no longer apply beginning with the 2017 tax year. But you still can take advantage of them for the 2016 year if you made any of the following improvements.
- Nonbusiness Energy Property Tax Credit: This credit is for 10% of the cost of qualified home energy-efficient products between $50-$500
- Residential Energy Property Tax Credit: This credit is for 30% of the cost of installing renewable energy sources.