Homeowner Tax Reduction You Might Be Eligible For

Take advantage of these home ownership-related tax deductions and strategies to lower your tax bill:


One of the neatest deductions itemizing homeowners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can be a house, trailer, or boat, as long as you can sleep in it, cook in it, and it has a toilet.

Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home.

If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit. Real Good Agents

If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.


Prepaid interest (or points) you paid when you took out your mortgage is generally 100% deductible in the year you paid it along with other mortgage interest.

If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.

But if you refinance to get a better rate or shorten the length of your mortgage, or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the life of your mortgage. Say you refi into a 10-year mortgage and pay $3,000 in points. You can deduct $300 per year for 10 years.

So what happens if you refi again down the road?

Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the life of the loan.

Home mortgage interest and points are reported on Schedule A of IRS Form 1040.

Your lender will send you a Form 1098 that lists the points you paid. If not, you should be able to find the amount listed on the HUD-1 settlement sheet you got when you closed the purchase of your home or your refinance closing.


You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.

If you bought a house this year, check your HUD-1 settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.


You can deduct the cost of private mortgage insurance (PMI) as mortgage interest on Schedule A if you itemize your return. The change only applies to loans taken out in 2007 or later.

What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately).

If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you can’t claim the deduction (10% x 10 = 100%).

Besides private mortgage insurance, there’s government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing, and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.


The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.

If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you deduct mortgage interest and real estate taxes on Schedule A.

Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Your expenses are deducted on Schedule E.

Rent your home for part of the year and use it yourself for more than the greater of 14 days or 10% of the days you rent it and you have to keep track of income, expenses, and allocate them based on how often you used and how often you rented the house.


This isn’t a deduction, but it’s important to keep track of if you claimed it in 2008.

There were federal first-time homebuyer tax credits in 2008, 2009, and 2010.

If you claimed the homebuyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest.

The IRS has a tool you can use to help figure out what you owe each year until it’s paid off. Or if the home stops being your main home, you may need to add the remaining unpaid credit amount to your income tax on your next tax return.

Generally, you don’t have to pay back the credit if you bought your home in 2009, 2010, or early 2011. The exception: You have to repay the full credit amount if you sold your house or stopped using it as primary residence within 36 months of the purchase date. Then you must repay it with your tax return for the year the home stopped being your principal residence.

The repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who got sent on extended duty at least 50 miles from their principal residence.


The Nonbusiness Energy Tax Credit lets you claim a credit for installing energy-efficient home systems. Tax credits are especially valuable because they let you offset what you owe the IRS dollar for dollar, in this case, for up to 10% of the amount you spent on certain upgrades.

The credit carries a lifetime cap of $500 (less for some products), so if you’ve used it in years past, you’ll have to subtract prior tax credits from that $500 limit. Lucky for you, there’s no cap on how much you’ll save on utility bills thanks to your energy-efficiency upgrades.

Among the upgrades that might qualify for the credit:

  • Biomass stoves
  • Heating, ventilation, and air conditioning
  • Insulation
  • Roofs (metal and asphalt)
  • Water heaters (non-solar)
  • Windows, doors, and skylights

File IRS Form 5695 with your return.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction. If you need to sell we buy houses Tampa.

5 Situations New Homeowners Don’t Know How To Handle

You know what to do if someone is having a heart attack, or you hear an intruder — call 911!

But what about those other emergencies — the ones where you’re not sure who to call?

Here are five home- (and sometimes life-) threatening emergencies that often baffle new homeowners.



It’ll only feed the fire. Instead, the National Fire Protection Association recommends smothering skillet flames by carefully sliding a lid over the pan and turning off the burner. Leave it covered until everything’s cool; removing the lid too quickly can allow the fire to spark back up.

If you reach for a fire extinguisher, make sure it’s Class B or ABC — using the wrong type could spread the flames. And if you have any doubt about safely fighting the fire, get everyone out and call 911.


Maybe your yard is constantly soggy.

Or you have no water pressure.

Or your latest water bill seems awfully high.

All can point to a water main break.

Call your utility provider pronto and ask them to turn come out and turn off the water — they may use a special tool, known as a water key — because that flow of water can leak into your basement if you don’t stop it. And the water company can charge you for all that water leaking out.

The utility company will also determine if the break is their problem (in the main line) or yours (the pipe between the municipal line and your home).

If it’s on your property, it’s on you to fix it (surprise!). You’ll need a plumber.

And you’re going to need to dig a trench yourself for the new piping, or pay someone to do it. Labor can cost hundreds, even thousands. And until you fix it, you won’t have water in your house.

The most common cause of water main breaks is tree roots. If you’re looking at your yard now and see trees that might cause this problem for you, hire an arborist who can help you figure out what to do — because you could hurt your home’s value if you take down the tree.


Get everyone out. Now. Do not pass go, do not grab your valuables, do not try to find the cause of it, or even call 911 (at least not yet).

Some people say you should open windows first and even press “reset,” but the CDC (Centers for Disease Control) says to get the hell out.

The risk justifies their advice. This deadly gas, which is colorless, odorless, and tasteless, will kill you. Full stop.

What’s more, small, hard-to-detect fires are often the source of CO. Once you’re outside, that’s when you need to call 911, which is trained to detect both. And let them know if anyone is experiencing symptoms of CO poisoning (headaches, dizziness, nausea, vomiting, and lethargy).

The fire department can help determine the cause, which can be anything from clogged air filters to a faulty gas appliance, or even a defective detector.


If your gutters have dents and pings from hail, there’s a good chance your roof does too, even if you can’t see it.

You need to call a roofer fast. And your insurance agent. Because if your roof is damaged, so are your neighbors’ roofs. And they’re going to be calling, too. Delaying could mean waiting months in line (giving leaks time to develop, causing even more damage) and could give cause for your insurance company to deny the claim.

Even if you’re unsure, a professional roofer or insurance agent can discern the true marks of hail damage because it’s not always easy to see. And what may seem harmless enough, like a few granules missing from asphalt shingles, could actually lead to worse damage later.


High winds, ice, or disease can bring down even the mightiest tree. If everyone is safe, and it didn’t damage your house, garage, or another big-ticket item, breathe a sigh of relief.

But be prepared to handle the clean-up and repairs without your insurance company’s help. Most policies won’t pay out if it didn’t strike a structure. If something small is covered, like a smashed fence or cracked patio, check your deductible before making a claim. You may have $800 worth of damage and a $500 deductible, but making a claim to get that $300 could cost you that much or more in the long run. Because even filing one claim on your insurance, can increase your rates.

It’s best to save claims for much larger disasters that run into the thousands.

No matter how you pay for it, pests love a good fallen tree, so get it outta there ASAP. Chop it up yourself, call in some pros, or let friends and neighbors know there’s free firewood available to anyone willing to haul it away.