The federal government wants more Americans to own their own homes, so it has created the following forms of home tax deductions as incentives:
Mortgage interest and property tax
You are able to deduct your property taxes and mortgage interest on loans of one million dollars or less. Your mortgage interest is the percentage of your monthly mortgage payment that goes toward paying the interest on the loan. This amount can be written off on your income tax as a home tax deduction, thereby lowering your tax bill. Be sure to check with your accountant to make sure you get the savings you’re entitled to.
Proceeds from the sale of your home
As long as you have lived in your home for at least two of the five years immediately before you sell it, you don’t have to pay taxes on any of the profit from the sale, unless that profit exceeds $250,000. If you are married and filing jointly, then you can claim a home tax deduction of up to $500,000 from the sale. Again, check with your accountant to make sure your deductions are calculated accurately.
Owning a home can be personally fulfilling. Home tax deductions make it financially fulfilling as well.
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