Having a house comes with several potential tax deductions, however, not every cost can be written off. If you are asking, “What can a homeowner write off on taxes?” Here are the most common deductions accepted by the IRS currently.
Mortgage Interest
Homeowners who opt for itemized deductions can claim interest paid on mortgage within the set limits. For loans closed on or after December 15, 2017, interest on up to $750,000 of qualified mortgage debt is deductible ($375,000 for married filing separately). Older loans may have higher limits.
Property Taxes
Homeowners pay state and local real estate taxes which are deductible, however, are caught under the State and Local Tax (SALT) deduction which has a cap of $10,000 ($5,000 if married filing separately) a year. This limit captures all property taxes and either state income tax or state sales tax.
Points Paid on Your Mortgage
Homeowners who paid “points” to reduce the interest on their mortgage have the option of deducting these the year paid for primary homes, or dividing the total amount and spreading it over the life of the loan for second homes.
Mortgage Insurance Premiums
These premiums for private mortgage insurance (PMI), or insurance from FHA, VA, and USDA, might be deductible for you, although income restrictions apply. However, this might change based on tax law updates.
Certain Home Office Expenses
If you set aside part of your home specifically for business, you may be eligible for the home office deduction. This is usually available for the self-employed and not for employees on a W-2.
What’s Not Deductible?
Most ongoing expenses for running a home, including homeowners’ insurance, monthly bills, and renovations, are not deductible. However, some may qualify for certain business credits.
Bottom Line
Homeowners are able to write off a number of expenses, including mortgage interest, property taxes, and certain points, but only if they itemize deductions. Given the changeable nature of tax laws and income limits, a tax consultant is the best professional to help ensure all deductions are claimed. Reach out to Dimov NYC CPA today for expert, custom-personalized tax guidance.
