Tis the season.
Did you know most homeowners can write off all mortgage interest up to $1.1 million for primary and secondary residences, as well as property taxes? Credits for property taxes and other tax breaks are also offered to in 21 states and the District of Columbia.
But mortgage interest and property taxes are not the only tax savings homeowners can enjoy. Look to see if you qualify for other deductions, including:
Discount Points: You can deduct points in the year that you pay them; you can only use this tax break on your primary residence; paying points must be an established business practice in your area.
Profits: In 1997, Congress passed a law that made the first $250,000 in profits ($500,000 for married couples) tax-free as long as you lived in the home for two of the last five years before the sale.
PMI and FHA Mortgage Insurance Premiums: You may not have even remembered that you’re paying private mortgage insurance, it’s built right into your mortgage payment. Check to be sure, then check with your tax preparer to see if your filing allows this deduction.
It’s important to remember that calculating federal (and local) income taxes can be highly complicated. Any information provided here should always be validated by a licensed tax professional before taking any tax deduction.
The Congressional Research Service (CRS) reports that in 2012, Americans took $68.5 billion in mortgage interest deductions (MID) when filing their tax returns, saving an average of $1,900.
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