Beyond the feeling of satisfaction you receive from having your own place, there are some important tax benefits that come with owning a home.
Whether you just moved in or have been a homeowner for years, here’s how to make the most of your home on your next tax return. Keep in mind that doing one or more of these things is likely to put you in line for an itemized deduction, rather than taking the standard deduction!
Mortgage interest deduction
Perhaps the biggest tax benefit of owning a home is the fact that you can deduct most of the interest you pay on your mortgage each year from the total income on which you pay federal tax.
If you have an expensive home or a large mortgage, this can dramatically increase the size of your federal income tax refund, or mean the difference between paying taxes and receiving a refund.
However, the amount of interest you can deduct is limited to $1 million each year, and the deduction only applies to an actual mortgage, not a home equity loan or line of credit.
Selling your home
Not only can your taxes benefit from living in a home, you can receive a break from selling it, too. Expenses like advertising, title insurance, and even some types of repairs, can all be counted as deductions.
The first $250,000 (or $500,000 for married couples) profit you make on the sale of your home is not taxed, either, as long as you’ve lived in the house for at least two years before selling it.
If you are buying or selling a home as a result of a job relocation, you might be eligible to deduct many of the expenses associated with moving from one place to another. This includes everything from moving trucks to storage units.
Remember to save all of your receipts from moving-related expenses if you are interested in claiming this deduction. And, when it’s time to file your taxes, make sure you read the fine print to ensure that your moving circumstances qualify.