Your Breaks And Benefits
via Author: Sarah Sharkey
When tax time rolls around each year, many homeowners like you search for tax breaks. Luckily, there are many tax deductions for homeowners that could amount to several thousand dollars.
Let’s take a closer look at which of your household expenses are deductible as a homeowner and consider whether you should take the standard deductible instead.
Home Equity Loan Interest
A home equity loan is essentially a second mortgage on your house. With a home equity loan, you can access the equity you’ve built in your home as collateral to borrow funds that you need for other purposes.
Like regular mortgage interest, you can deduct the interest you’ve paid on home equity loans and home equity lines of credit. However, you can only make this deduction if you used the borrowed funds to pay for a home improvement. Prior to the Tax Cuts and Jobs Act of 2017, you could deduct the interest on these loans regardless of how you spent the funds.
Mortgage Interest
If you have a mortgage on your home, you can take advantage of the mortgage interest deduction. You can lower your taxable income through this itemized deduction of mortgage interest.
In the past, homeowners could deduct up to $1 million in mortgage interest. However, the Tax Cuts and Jobs Act has reduced this limit to $750,000 as a single filer or married couple filing jointly. If you are married but filing separately, the deduction limit is $375,000 for each party.
Property Taxes
As a homeowner, you’ll face property taxes at a state and local level. You can deduct up to $10,000 of property taxes as a married couple filing jointly – or $5,000 if you are single or married filing separately.
Depending on your location, the property tax deduction can be very valuable
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