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Tax Breaks For Homeowners

If death and taxes are two things you can always count on in life, there should probably be a third: the slew of tax breaks offered every year to encourage more Americans to buy a home.

Owning a home is a pretty big deal, so the tax law provides several ways for your homeownership costs to cut your taxes. Certain expenses are deductible, provided you itemize deductions. Let’s take a look at some of these deductions.

What Homeowner Tax Deductions Am I Eligible For?

Mortgage Interest

This is one of the most common tax breaks for homeowners, and applies to both your main home and a second home. The amount of qualified mortgage interest you paid in a year is typically reported on Form 1098, which is sent to the homeowner from the lender. To be eligible to deduct mortgage interest:

  • You must have taken a loan to buy, build, or improve a home.
  • The loan must also be secured, meaning that you signed a mortgage agreement, deed, or land contract for your main or second residence.
  • The debt must be qualified acquisition debt or qualified home equity debt.

Mortgage Points

A "point" on a home mortgage is a payment that equals 1% of your total loan amount, and is paid up front to a lender to reduce your total interest rate. Unfortunately, you can only deduct the amount of any points paid in the year that you paid them — so if you've taken out a new home loan in the past year and paid points, don't miss this tax break!

 

Real Estate Taxes

Real estate taxes can be deducted on Form 1040, Schedule A. To be deductible, real estate taxes must be assessed as a percentage of the value of the property. Additionally, the taxes must go into the taxing authority’s general fund.

Don't forget to include any taxes you may have reimbursed the seller at closing. These are real estate taxes the seller had already paid before you took ownership. Your Form 1098 won't include these taxes. Instead, that amount will be shown on the Closing Disclosure statement.

Home Office

Self-employed? If you have a home office that meets IRS standards, there may be significant tax benefits for you. For example, if your home office represents 5% of your home's total square footage, you may be eligible to deduct 5% off that property's utilities, insurance, and property taxes. Just remember there are strict rules around what constitutes a home office with "regular and exclusive use" — so consult Publication 587 or your H&R Block Tax Pro to be sure you qualify for this deduction.

File Your Taxes With More Zero

With H&R Block More Zero you can prepare and file your federal and state 1040EZ, 1040A or 1040 with Schedule A completely free. That means more people can file for free with H&R Block Online than with TurboTax.

Online tax filing with Block means having the ability to file taxes online from any device, a fast and easy way to upload your tax information and the option of a having your return checked by a Tax Pro before filing. It also means getting your absolute maximum refund guaranteed.

File elsewhere last year? Now it’s easier than ever to switch to H&R Block Online. With drag and drop you can import a PDF of last year’s return from any other tax prep service.

File for free with H&R Block Online today.

File Online with H&R Block More Zero

Average online filing experience rating   4.3 (87989)

  • $ 0
  • FEDERAL
  • $ 0
  • STATE
  • $ 0
  • TO FILE
  • $ 0
  • TO ITEMIZE DEDUCTIONS

You could pay up to $94.98 when filing 1040 with Schedule A using TurboTax Federal Free Edition**



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Tax Tips and Benefits for your First Job from H&R Block

Tax tips and benefits for your first job. Learn more about which expenses you can deduct, the allowances you should choose, and 401k contributions. The tax experts at H&R Block will help you get every single dollar you deserve. To schedule an appointment, file online or to get more details visit hrblock.com.


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