Five Major Tax Breaks for Homeowners

From freely making simple design choices around the house to having something that is constantly accruing in value, there certainly are perks to being a homeowner year-round. But, spring brings particular good reason to appreciate homeownership.

During tax season, homeowners can receive a little break from Uncle Sam in several areas. As tax day—which is April 17th this year—approaches, we’re shining some light on a few breaks that homeowners can get from the IRS.

Here are five tax breaks homeowners may qualify for this year:

1. Property Taxes

Any taxes you pay on your property throughout the year can be deducted during tax season. This deduction applies to long-time homeowners and any new homeowners who purchased their home during 2017. Beginning in 2018, this deduction will be capped at $10,000, but for many Americans, that will not make an impact during tax season.

2. Mortgage Interest

In addition to deducting property taxes, homeowners also can enjoy a tax break when it comes to interest paid on your mortgage. Any interest you pay on your mortgage throughout the year can be deducted during tax time. In fact, this deduction typically can be taken on your primary residence and a secondary residence. There are limitations, but they do not apply to all taxpayers.

3. Points Paid

If you bought a home in 2017, you may be eligible to deduct any fees you paid to buy points during your home purchase. Buying points from your lender is a way to obtain a lower annual percentage rate (APR), which saves you money for the duration of your mortgage. If you paid money upfront to secure a lower interest rate on a home you bought in 2017, you may be able to deduct that amount this tax season.

4. Home Equity Loan Interest

If you took out a home equity loan during 2017 to make renovations to your current home or to purchase a second home, you may be eligible to deduct any interest you paid on that loan. Just note that tax reform has made a few changes to this annual deduction. For instance, if you took out a home equity line of credit to pay off a credit card, you are not able to take the deduction during tax time.

5. Home Office Expenses

If you have—and use—a designated space in your home for business, you may be able to take a home office deduction. With this itemization, you typically can include a portion of your mortgage, phone, internet and other home expenses. This deduction may have some strict guidelines, so make sure you qualify before opting to use it.

Obviously, homeowner tax breaks can be a major help during tax time, but it always is a good idea to proceed with caution. If you think you qualify for a particular tax break, consult a professional accountant or tax preparer before making the itemization and filing your taxes. Oh, and don’t forget to file by that April 17th deadline!