YOUR LIFE
Home $weet Tax Break
Yes, it's the American Dream. Yes, it's a very dependable investment, which often grows in value. But did you know that there are also great tax savings in buying a new home, picket fence or no?
Tax savings with home ownership:
- You can deduct mortgage interest on a home acquisition loan up to $1 million for married filing jointly or $500,000 for married filing separately. You can also deduct property taxes paid, which is especially advantageous to those who are just beginning to pay off their mortgages.
- "Points," or loan origination fees, can be deducted the year you pay them or amortized over the term of your mortgage.
- Even the interest from home improvement loans is tax-deductible, up to the limitation for acquisition debt: $1 million for married filing jointly and $500,000 for married filing separately.
- Home equity loan interest is deductible for loans up to $100,000 for married filing jointly and $50,000 for married filing separately.
- If you sell your house, you can exclude up to $500,000 of capital gain if you are married filing jointly - $250,000 if you are married filing separately - from your taxable income. You must have owned and used the home as your personal residence for two out of the five years before the sale.