Tax Benefits for Homeowners | Journey Home Lending
You already know homeownership has its perks, from building equity to having the ability to hang pictures on the walls. This time of year, as we get our financial records in order and our tax documents ready, there are some others you need to be sure you’re aware of.
The deductions most Americans can claim never add up to more than that standard deduction, which is $12,400 for single filers, $18,650 for heads of households, and $24,800 for those married and filing jointly. If you’re working to make sure you save all you can on your taxes and looking for everything to add to your total, deductions and credits for homeowners are a great option.
Tax Break for Home Buyers
Buying a home can take a lot of money out of your pocket, so you’ll likely welcome every financial break you can get. If you got into a new home in 2020, here are some of the options available to you for deductions:
Mortgage Points Deduction. If your mortgage included points, which go by other names including loan origination fees and prepaid mortgage insurance, there’s opportunity to deduct those, provided you meet some criteria. You may also be able to get a deduction for points incurred in the course of improving or refinancing your home.
Homeowner Tax Benefits
The majority of the tax breaks in owning a home don’t come in the first year but are recurring for years thereafter to a point. That’s because you pay many of them monthly for either a portion or all of the loan term, or for the entire time you own the home.
Private Mortgage Insurance Deduction. If you pay private mortgage insurance on the loan for your primary home and itemize deductions, you may be able to deduct those payments.
Mortgage Interest Deduction. This is the largest single, mortgage-related deduction for most borrowers. You can deduct interest paid on debt up to $750,000 for those married and filing jointly.
Real Estate Tax Deduction. For most people, the property tax deduction is one they can take for as long as they own their homes, though some areas waive property taxes for seniors.
Home Office Deduction Information
Many of us spent most of 2020 working out of our homes, rather than the office. That may have plenty of people hoping to take the home office deduction, but there’s a good chance most of them won’t be able to actually get that benefit.
That’s because just working at home doesn’t qualify you for the deduction. Regular employees can’t get this benefit; it’s only for those who are self-employed, meaning they own their businesses or work on a freelance basis, and have dedicated spaces in their homes as the principal place of business. For them, this can be a decent deduction, with the opportunity to deduct equipment and a portion of home costs.
The mortgage experts at Journey Home Lending are here to help you get the right loan for your situation. Call us today and let us help you get started on the road to homeownership!