Homeowners: Review these House related deductions
The summer months are a popular time to buy or sell a house. New homeowners should put reviewing the tax deductions, programs and housing allowances they may be eligible for on their move in to-do list.
Deductible expenses related to owning a house include state and local real estate taxes, which are subject to a limit of $10,000, as well as home mortgage interest within the permissible limits. To claim these deductions, taxpayers need to itemize their expenses on their tax returns.
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ToggleNon-deductible payments and expenses
Homeowners can’t deduct any of the following items:
- Insurance including fire and comprehensive coverage and title insurance
- The amount applied to reduce the principal of the mortgage
- Wages paid to domestic help
- Depreciation
- The cost of utilities, such as gas, electricity or water
- Most settlement or closing costs
- Forfeited deposits, down payments or earnest money
- Internet or Wi-Fi system or service
- Homeowners’ association fees, condominium association fees or common charges
- Home repairs
Mortgage Interest Credit:
The mortgage interest credit is designed to assist individuals with lower income in achieving homeownership. Qualified individuals can claim this credit annually for a portion of the home mortgage interest they have paid. To be eligible for the credit, a homeowner must have received a qualified Mortgage Credit Certificate from their state or local government, which is issued specifically for a new mortgage used to purchase their primary residence.
Homeowners Assistance Fund:
The Homeowners Assistance Fund program offers financial aid to eligible homeowners, aiming to cover certain expenses associated with their primary residence. The program’s purpose is to prevent mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and assist homeowners experiencing financial hardship after January 21, 2020.
Minister’s or Military Housing Allowance:
Ministers and members of the uniformed services who receive a nontaxable housing allowance can still claim deductions for their real estate taxes and home mortgage interest. They are not required to reduce their deductions based on the housing allowance they receive.
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