From mortgage points to PMI, unlock the essential info about how homeownership affects your tax burden.
Hours after we closed on our first house, my husband and I sat in our empty new living room and stared at the walls. He was the first to speak, saying simply, “I thought it was painted.”
We learned a lot about that old house over the next 15 years. While we knew to expect some of the work, other tasks, such as needing to paint the walls, we figured out as we went along. One of the changes we didn’t anticipate was needing to make some adjustments to our tax forms.
The forms you fill out when you buy your house are just the beginning. We quickly understood that first-time homeowners have years of mortgage and insurance paperwork to look forward to. Then, of course, there are the taxes. To help you sort through that pile of paperwork and ensure you’re saving as much money as possible we did some research into tax benefits that can come from buying.
Six Tax Benefits for New Homeowners
1. You can deduct the interest you pay on your mortgage.
The home mortgage interest deduction is probably the best-known tax benefit for homeowners. This deduction allows you to deduct all the interest you pay toward your home mortgage with a few exceptions, including these big ones:- Your mortgage can’t be more than $1 million.
- Your mortgage must be secured by your home (unsecured loans don’t count).
- Your mortgage must be on a qualified home, meaning your main or second home (vacation homes count too).