Your Home as a Tax Shelter: Top Ten Tax Deductions for Owning Your Home
Your home provides many tax benefits — from the time you buy it right on through when you decide to sell: You can deduct property taxes, mortgage interest, home improvement and equity loan interest, and points. And when you move, you can deduct the costs of the sale and of capital improvements, as well as moving costs, under some circumstances.
If you’re filing jointly, you can deduct all your interest payments on a maximum of $1 million in mortgage debt secured by a first or second home. The maximums are halved for married taxpayers filing separately. You can’t use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.
If your lender required you to buy PMI (private mortgage insurance, often required when the loan is for more than 80% of the home’s purchase price), the PMI premiums are tax-deductible for mortgages taken out in 2007 through 2010. However, the amount of the deduction depends on your income — if you’re earning more than $100,000 per year, the deduction starts to phase out.
Learn more from IRS Publication 936, Home Mortgage Interest Deduction, available at www.irs.gov.
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