Among the many perks of owning a home, one of the biggest is the financial benefits. Your money no longer does a disappearing act into your landlord’s pockets, and instead it comes back to you in building equity and – drumroll – tax deductions. We’ll cover four of the main tax deductions you can qualify for with your mortgage.
Mortgage Interest
Like any other kind of loan, mortgages have interest that compounds on them over time that you pay on every month. This is the main deduction you can get from owning a home. It’s pretty simple – you deduct the interest your pay on your mortgage. For homes bought after December 15, 2017, the interest paid on up to $750,000 of mortgage debt can be deducted for married couples filing jointly. For those filing separately, the limit is $375,000.
Property Taxes
For the uninitiated, property taxes are taxes you pay on your house based on the value of the property. If you pay your property taxes through an escrow account, your lender should have a form with the amount on it. If you pay them directly to your municipality, you should have the records yourself.
Loan Points
Loan points are fees paid to your lender at closing to reduce your interest rate, each point being equivalent to 1% of the total loan. Paying these can lower your monthly payments. The amount you paid on these can be deducted, but you will have had to actually paid for them.
Private Mortgage Insurance
If you put less than 20% down on your loan, you have to get private mortgage insurance (PMI). This is to protect lenders from losses in the case the loan defaults. If you’re married, you can claim the deduction if your adjusted gross income is less than $100,000, and if you’re single, it’s capped at $50,000.
While the financial benefits of being a homeowner are certainly the decision-makers, there’s still many other things to tip in the favor of owning a home. Reach out to your local Flat Branch to learn more!
