10 Tax Benefits of Home Ownership

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Real Estate

There are many tax deductions, credits, and deferrals associated with homeownership. Consult a tax professional to make sure you are maximizing them.

  1. MORTGAGE INTEREST DEDUCTION The interest you paid on your mortgage is tax deductible on up to $750,000 of mortgage debt. Look for the Form 1098 from your lender.
  2. MORTGAGE POINTS DEDUCTION If you bought “points” (paying cash to the bank upfront in return for a lower interest rate), that amount is tax deductible.
  3. MORTGAGE INSURANCE DEDUCTION If you bought a home with a low down payment, you probably had to purchase private mortgage insurance. You can likely deduct these payments.
  4. MORTGAGE CREDIT CERTIFICATE A tax credit (issued by local or state authorities) of up to $2,000 for lower-income families that qualify.
  5. PROPERTY TAX DEDUCTION State and local property taxes (SALT) paid of up to $10,000 can be deducted from your federal taxable income.
  6. HOME OFFICE DEDUCTION Expenses associated with dedicated WFH space can deducted.
  7. RESIDENTIAL ENERGY CREDIT Just installed solar panels? You can claim a tax credit for the equivalent of 22-26% of the installation cost.
  8. TAX-FREE PROFITS ON YOUR PRIMARY HOME SALE You’ll pay no capital gains taxes on profits of up to $250,000 if single and $500,000 if filing jointly.
  9. HOME IMPROVEMENTS CAN REDUCE CAPITAL GAINS FURTHER The money you spent on improvements gets added to the initial cost of your property, reducing the size of your capital gains on sale.
  10. 1031 TAX-DEFERRED EXCHANGE (FOR INVESTMENT PROPERTIES) You may be able to defer the capital gains on the sale of an investment property if you quickly buy a property of equal or greater value be deducted.