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The Tax Benefits of Owning a Home
Tuesday, August 31, 2010
The tax benefits of owning a home are often misunderstood, and it’s easy to understand why. The current tax code can be very difficult to understand. Let me simplify the tax benefits of owning a home:
1. Interest paid on your home’s mortgage is deductible up to $1million of home mortgage debt.
2. Interest paid on a home equity loan is deductible up to $100,000 of home equity debt.
4. Mortgage Insurance Premium for homes purchased between 2007-2010 is deductible (subject to $100,000 adjusted gross income limitation).
5. Points paid to reduce the interest rate of your mortgage are also deductible (note: if you pay points as part of refinance the points must be deducted over the life of the new loan unless the refinance involves improvements to your home).
Tax Planning Tip: These 5 deductions are itemized deductions and are claimed on Schedule A of your tax return. You must itemize your return to receive the benefit. If you are subject to the alternative minimum tax “AMT” you may not receive the tax deduction for some of these items.
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