Wondering what impact buying a home will have on your taxes? If you bought a home in 2021 or earlier, you may be able to take advantage of the following tax benefits of owning a home. If you’re thinking about buying a home this year, keep these benefits in mind!
If you plan to itemize your deductions, remember to claim these:
Mortgage Interest: If you paid mortgage interest in 2021 on a home purchased before December 14, 2017, you can deduct your mortgage interest on a loan of up to $1 million. If you paid mortgage interest in 2021 on a loan purchased after that date, you can deduct mortgage interest on the first $750,000 of that loan.
Private Mortgage Insurance (PMI): If you are paying PMI on your loan, you can deduct it thanks to the Mortgage Insurance Tax Deduction Act of 2021.
It may or may not make sense for you to claim some of these deductions. Discuss it with your tax professional to identify your best options.
Property Taxes: You can deduct up to $10,000 in property taxes (if married and filing jointly).
Home Equity Line of Credit (HELOC) Interest: If you took out a HELOC to make improvements to your home, you may be able to deduct your interest (up to $750,000) — but only if the funds are going towards your home.
Speaking of home improvements, if you’ve gone green and added solar panels to your home, do not forget to claim your energy credit. You can also claim a credit for your home office if you are self-employed. Be sure to read the fine print on that credit since it does not not apply to those of us who worked from home because of Covid (but who still receive W-2).
Want to learn more about what you can deduct or which credits you can claim? Check out the IRS website or chat with your tax professional.