The Best Tax Deductions for Homeowners
Tax season is around the corner. That means it’s time to start thinking about your tax deductions. Fortunately, there are quite a few tax deductions homeowners can take. Read them over so you have a better idea of which deductions you can take on your tax return this year. What are tax deductions? Tax deductions are expenses deducted from your gross income to reduce your taxable income on your tax return. In general, people either take the standard deduction or an itemized deduction in an effort to lower their tax burden. However, as a rule of thumb, it only makes sense to take an itemized deduction if the total tax benefit is greater than it would be for the standard deduction. For the 2020 tax year, the standard deduction is as follows: Single filers and those married filing separately: $12,400 Those married filing jointly: $24,800 Heads of household: $18,650 Common tax deductions for homeowners While there’s no specific homeowner tax deduction, homeowners will often choose to itemize their deductions because quite a few of the costs related to home ownership qualify as tax deductions. We’ve laid them out so you can determine which ones apply to you specifically. Mortgage interest The mortgage interest deduction is one of the most common deductions homeowners take. Every month, when you pay down a portion of your loan, some of it goes to interest. Each tax year, you can deduct a portion of the interest you’ve paid for a tax break. Unfortunately, though, you can only deduct mortgage interest up to a certain limit, and that limit depends on when your loan was originated. These are the limits as they stand in 2021: If your mortgage originated any time between October 14, 1987 and December 16, 2017, you are allowed to deduct up to …