Tax Deductions for Homeowners

Did you know being a homeowner means you can get tax deductions that you might not even be aware of? Here are a few homeowner tax deductions to consider. Not everyone can take all of these deductions, so please be sure to always check with a tax professional.

Mortgage Interest
The interest you’re paying on the loan(s) for your home may be tax-deductible, no matter what the interest rate . Mortgage interest is one of the best tax deductions, and some homeowners don’t even know about it. The interest you deduct may be on a loan secured by your first or second home. Your deduction may be limited if all mortgages on your home total either more than the fair market value of your home, or more than $1 million ($500,000 if you’re married and filing separately from your spouse); or if your home equity loans total more than $100,000 ($50,000 if you’re married and filing separately). Learn more about this tax deduction: www.IRS.gov.

Points Paid on a Refinanced Loan
If you refinanced, you may be able to write off the points you paid to get a lower rate on the new loan. Points paid on a refinance are deducted proportionately over the life of your loan. For example, if your new loan has a 15-year term, you'll deduct 1/15th of your points each year.

If you've refinanced before, and you have points from the previous refinance that haven't yet been deducted, you can write off the rest of those points in the year you refinance. Learn more about this tax deduction: www.IRS.gov.

Points Paid on a Home Purchase Loan
The points you pay to get a lower interest rate on a home purchase loan are tax-deductible for that year. Whether you paid for them or whether the seller paid for points for you, you may be able to deduct them. Learn more about this tax deduction: www.IRS.gov.

Capital Gains on the Sale of a Home
Once every two years, single homeowners can take advantage of a tax-exempt profit of up to $250,000 when they sell their home, as long as the home was the seller’s primary residence for two of the last five years. Married homeowners filing joint tax returns do not have to pay taxes on up to $500,000 of the profits from the sale of their home. Learn more about this tax deduction: www.IRS.gov.

Home Improvements
You can't directly deduct the expenses associated with home improvements from your taxes, but making improvements to your home may increase the value of your home. Keep all of your receipts from home improvements to help you prove what your home is worth and you could reduce the potential taxable gain when it comes time to sell your home. Learn more about this tax deduction: www.IRS.gov.

Real Estate and Property Taxes
State and local property taxes can be deducted as an expense against income. However, real estate taxes are only deductible in the year they are actually paid to the government.
Your mortgage interest statement should list the amount of real estate taxes you paid if your property taxes and homeowners' insurance were placed in an escrow account when you closed on your mortgage. If you cannot find this information, you can contact your local city and county records offices for more details. Learn more about this tax deduction: www.IRS.gov.

Home Offices
If you have a home office, you may be able to deduct the costs associated with improving and maintaining that portion of your house. For example, you can deduct expenses associated with repairs and maintenance for the home office as well as a portion of indirect expenses such as the cost of utilities and garbage pickup. Learn more about this tax deduction: www.IRS.gov.

Limited Moving Expenses
Homeowners who have recently relocated for work may be able to write off the cost of moving themselves, their household goods, their vehicles, and other reasonable costs associated with the move. Learn more about this tax deduction: www.IRS.gov.

Health-Related Improvements
If you’ve made home improvements for medical reasons to help a chronically ill or disabled person, you may be able to deduct those expenses entirely from your taxes. For instance, you may be able to deduct a portion of expenses for a swimming pool used for treating someone with polio, changes made to a home for a person with a wheelchair, etc. Learn more about this tax deduction: www.IRS.gov.

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