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Tax-Deductible Home Buying Expenses You Should Know💵




It’s tax time and homeownership comes with numerous perks, one of them is the potential to

benefit from tax deductions. While not every expense related to buying a home is tax-deductible,

there are several key items that can contribute to significant savings this tax season. Let's

explore the home buying expenses that may qualify for tax deductions, helping you maximize

the financial advantages of owning a home.


1. Mortgage Interest:

Arguably the most well-known and significant deduction for homeowners is the mortgage

interest deduction. Homeowners can deduct the interest paid on their mortgage loan, subject to

certain limits. This deduction is applicable to both primary and secondary residences,

potentially leading to substantial tax savings.


2. Points Paid at Closing:

If you paid discount points (if you closed later in 2023 you absolutely did) to secure a lower

interest rate on your mortgage, those points may be deductible. Each point is typically equal to

1% of your loan amount, and as long as the points are a standard practice in your area and the

loan meets certain criteria, you may be eligible to deduct them.



3. Property Taxes:

Property taxes paid on your home are generally tax-deductible. These taxes fund local services

and infrastructure, and the IRS allows homeowners to deduct these expenses from their taxable

income. It's important to note that there are limitations on the total amount of state and local

taxes that can be deducted. One more reminder for property taxes, make sure you have filed for

the homestead exemption on your primary residence, generally the deadline will be in April to

qualify for the current year.


4. Home Office Expenses:

If you use a portion of your home exclusively for business purposes, you may qualify for a home

office deduction. This can include a percentage of your utilities, and home maintenance costs.

However, the space must be used regularly and exclusively for business activities to qualify.




5. Private Mortgage Insurance (PMI):

For homeowners who put less than 20% down on their home and are required to pay private

mortgage insurance, there's good news. The PMI deduction allows eligible taxpayers to deduct

the cost of PMI premiums, providing relief for those who haven't yet built significant equity in

their homes.


6. Energy-Efficient Home Improvements:

Certain energy-efficient home improvements, such as installing solar panels, energy-efficient

windows, or a solar water heater, may qualify for tax credits. While not a direct deduction, these

credits can directly reduce your tax liability.


7. Home Equity Loan Interest:

Interest paid on a home equity loan or home equity line of credit (HELOC) may be deductible in

certain circumstances. However, the Tax Cuts and Jobs Act of 2017 imposed stricter rules on

the deductibility of home equity loan interest, so it's important to consult with a tax professional

to determine eligibility.



8. Moving Expenses (in Some Cases):

While the moving expense deduction was suspended for most taxpayers under the Tax Cuts

and Jobs Act, certain members of the military may still be eligible to deduct moving expenses.

It's advisable to check current tax laws and consult with a tax professional for the latest

information.


It is encouraging to know that homeownership can bring not only the satisfaction of having a

place to call your own but also potential tax benefits. Leveraging these deductions requires

careful record-keeping and an understanding of current tax laws. It's highly recommended to

consult with a qualified tax professional to ensure you're taking advantage of all eligible

deductions and maximizing your potential savings as a homeowner.



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