It’s THAT time of year again—and no, we’re not talking about spring break and fun-filled vacations. Instead, we’re referring to that exciting time on the calendar known by many as tax season!
For decades, buying a home always included the ability to take advantage of significant tax breaks once officially becoming a home owner. But thanks to recent changes in the tax code, things today are slightly different. Various deductions still remain, of course, but some slight modifications have been made when it comes to buying and owning a home. And with this in mind, we thought now is as good of a time as any to outline 3 tax deductions homeowners shouldn’t overlook in 2019.
Mortgage Interest Deduction
For mortgages approved after December 2017, the mortgage interest deduction can only be taken on home loans (or debt) of up to $750,000. This is down from $1 million prior to the end of 2017. But what does this mean? Well, for recent home buyers, this is significant due to how most mortgages are structured. During the beginning years of your home loan, a major portion of each payment goes directly towards paying down the interest, allowing you to write off a higher amount and trimming down your tax bill early on in your loan term.
Yep—property taxes are definitely still deductible. Keep in mind, however, that depending on your status, homeowners can deduct up to $10,000 in taxes, and that deduction is for the year in which they’re paid, not the year in which they’re due.
Mortgage points are also deductible if you purchased a home in 2018. So for example, if you prepaid some of your loan interest in exchange for a better interest rate (discount points), those discount points are tax deductible. In addition, loan origination fees are also tax deductible as well, which is often overlooked.
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Listing information last updated on May 30th, 2020 at 11:31pm MDT.