15
Jan

The average tax return becomes a bit more complicated when the taxpayer owns a home. Fortunately, this complication usually leads to an overall tax savings. By owning a home the taxpayer is more likely to itemize on Schedule A of Form 1040. There are a few itemized deductions relating to home ownership. The first is real-estate taxes. During the year, all real-estate taxes paid on your home can be deducted. If you received a real estate refund during the year, you must reduce the amount of the deduction by the refund received. The second is mortgage interest. All of the mortgage interest paid on a loan secured by your main home or second home, can be deducted. The loan can be for a mortgage, home improvement or home equity loan. Interest incurred on an equity loan in excess of $100,000 may not be deducted. The limit for mortgage interest is $1,000,000.

Most of the above information can be found on form 1098. This is sent to the taxpayer yearly from their mortgage holder.

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