Seven Homeownership Tax Benefits
Did you know that the law setting current tax benefits was changed in 2017? Here’s a refresher on this newer law. As with most tax rules, there can be complicating factors and exceptions. I will be the first person to tell you that I am not authorized to give tax advice, so always consult your tax advisor. Think of this list as offering general guidelines that can be helpful.
1. Home Mortgage Interest Payments
If your mortgage is below $750,000 [including a home equity line of credit (HELOC) if you have one], then interest payments are tax deductible, if you itemize deductions. If your mortgage was taken before 2018, you can itemize interest payments toward up to $1 million in loans.
2. Property Tax Payments
If you itemize your return, you can deduct up to $10,000 in property taxes paid on your home. You’ll get an IRS Form 1098 that documents what you have paid.
3. “Points” You Paid When Getting Your Mortgage
Usually lenders charge “points” (a percent of the total mortgage) for issuing your mortgage. If you paid the points at closing, they are a tax deduction. If the point charges were rolled into your loan, you can only deduct the portion of points you’ve paid in the tax year.
4. Private Mortgage Insurance (PMI)
If you paid PMI, it may or may not be a deduction. It could depend on your adjusted gross income, and whether this deduction is renewed year to year. Ask your accountant.
5. Energy Upgrades
Under recent tax law, most energy upgrades do not qualify for tax incentives. The one exception: You can still claim tax deductions on solar energy–both for electric and water heating equipment, through 2021.
6. Home Office
If you have a home office, which is more common in coronavirus times, you may be eligible for a $5 per square foot tax deduction, based on the size of your office, up to a maximum of $1,500. Again, there are restrictions, so be sure to ask your tax professional.
7. Home Sale
Building equity in your home is one of the most powerful ways to build personal wealth. Even better, when you sell your home, and have lived in it two out of the past five years, you’re excluded from paying taxes (capital gains) on profits up to $500,000 if you’re married. You can use this exemption more than once, but not within 2 years of declaring the exemption.
This list hits the seven highlights of the tax benefits of owning a home. Consult your tax professional or tax software for more details so you too can take advantage and potentially save hundreds to thousands of dollars this year!
Fast Fact
According to the Bureau of Labor Statistics, the average American household has after-tax income of $67,241, of which $20,091 is spent on housing.
As always, if you’re thinking of listing, or if you don’t own a home, condo or similar, and are ready to buy, let me know and I’ll help you take advantage of current market conditions, as well as the many resources and referrals I have from my many years in the industry. No matter what is happening in the economy, and especially now, you need a professional real estate broker as your ally, and you’ll be in great hands with my team!
We’re excited to help you #moveforward,
Teresa Catania, Broker
Fred Real Estate Group
Bend Oregon | Central Oregon | Portland Oregon
503-740-3293
teresa@teresacatania.com
I’m a nine-year Five Star Real Estate Agent!