Tax Help for Home Buyers and Homeowners
Purchasing a home is an exciting experience, and can be even more exciting if you take advantage of the tax credits and tax deductions available for tax help. Below is an overview of the kind of tax help you can expect to receive as a homebuyer and homeowner.
Mortgage Interest
You can deduct the mortgage interest you pay on mortgages up to $1,000,000, as long as the mortgage loan was used to buy, build, or improve a home. The interest on home equity loans (HELs) and refinanced loans is also deductible for tax help, though a $100,000 limit applies to the HELs that you deduct the interest from. If you deduct the mortgage interest from a second home that you also rent out, make sure you spend at least 14 days a year there ― or the IRS will classify it as a rental property and you won’t be able to receive as much tax help.
Mortgage Points
You can deduct “mortgage points” that you paid as a percentage of the mortgage loan at the initial sale. As with the mortgage interest deduction, you must be able to prove that you used these payments to purchase, build, or improve your home. Points paid by the seller may also be deductible by the homebuyer for tax help, in the year they are paid.
Property Tax
For more tax help, don’t forget to deduct your property taxes ― these usually go into an escrow account to be paid once a year. Each year, you can deduct the amount that was paid from the escrow account to the government. You may not even have to itemize your deductions in order to claim this form of tax help. Single filers are able to claim a property tax deduction of up to $500 from their standard deduction of $5,700. Married filers are able to claim property tax help of up to $1,000 from their standard deduction of $11,400.
Home Improvements
If you are planning to sell your home eventually, it may be worth it to make home improvements that increase its market value. Being able to show that you invested in improving your home’s worth before resale can potentially reduce the capital gains you are taxed on. Additionally, home improvements for medical purposes can usually be deducted. If you install a hand rail in the shower for an elderly person or attach a wheelchair access ramp to your back porch, keep the receipts and deduct them for tax help.