Owning a home comes with its perks, and tax deductions are among the most significant.
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These deductions can help reduce your taxable income and potentially save you money. Let’s dive into some straightforward deductions that homeowners should be aware of:
Mortgage Interest Deduction
One of the most common deductions is for mortgage interest. As a homeowner, you can deduct the interest paid on your mortgage, up to certain limits. For mortgages taken out after December 15, 2017, the limit is $750,000 for single filers or couples filing jointly. If your mortgage predates this, the limit is $1,000,000.
Keep in mind that this deduction requires itemizing your taxes rather than taking the standard deduction.
Property Tax Deduction
Homeowners often pay property taxes throughout the year. The good news is that you can deduct these taxes on your federal income tax return, up to $10,000 combined for all state and local taxes.
Remember, you can only deduct property taxes actually paid during the tax year you’re filing.
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Discount Points Deduction
If you’ve bought discount points to lower your mortgage rate, you may be able to deduct them. Ensure you meet specific requirements, such as using the loan to purchase or build your main home and the points being a common practice in your area.
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Home Office Deduction
For those who work from home, there’s a potential deduction for home office expenses. If you have a dedicated space for your business, you may be eligible to deduct related expenses. The deduction amount varies based on the method you use for calculation.
Whether you’re self-employed or work remotely, this deduction could be beneficial.
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Remember, each deduction has its own set of rules, limits, and requirements.
https://www.irs.gov/taxtopics/tc509
For detailed information, always consult the IRS website at https://www.irs.gov/ or a tax professional.
Owning a home not only provides stability but also offers opportunities to save on taxes. By understanding these deductions, you can make the most of homeownership come tax season.