Tax Deductions for Home Ownership
You know you may receive a deduction on income tax on the mortgage interest paid. However, there are additional tax deductions you may take on your second home or principal residence -- like property taxes.These may qualify you for a tax deduction:
- Property taxes. Do not forget to include all taxes you might have reimbursed a seller for. These include taxes a seller already had paid prior to you taking ownership. You will not get a 1098 report that lists those taxes. That amount instead, is going to be shown on your settlement sheet.
- The mortgage interest on a second residence, as well as your primary residence. (There are limitations, yet very few taxpayers become affected.)
- Interest on up to $100,000 that is borrowed on a home equity line of credit or home equity loan, irrespective of the loan’s reason.
- Points which you paid as you bought the home (or the ones you convinced a seller to pay).
- Premiums paid for a Mortgage Insurance Premium, yet just for policies that were issued after the year 2006. Unless Congress renews the deduction, 2016 was the last year it could be claimed. (The right to the deduction will disappear as the Adjusted Gross Income increases from $100,000 - $109,000 (or from $50,000 - $54,500 for the ones who use the status of married filing separately.)
- Home improvements needed for clinical care.
What can't be deducted?You cannot deduct these payments for a personal home:
- Homeowners association dues
- Home insurance
- Home’s appraisal fees
- The expense of home improvements, except within the fairly rare case in which they are eligible as medical expenses. (However, keep the receipts. They might assist in reducing your taxes as you sell the house.)