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First-Time Home Buyer
There is a tax benefit to home ownership – the ability to claim a wide range of expenses including mortgage interest, state and local income or sales taxes,real estate and property taxes, and other expenses such as a disaster loss by itemizing deductions.
Home Owner Deductions
The following deductions may be available for homeowners:
- Home Mortgage Interest
As a new homeowner, you can deduct the interest on up to $750,000 of debt incurred to acquire or improve either a primary or secondary residence. The deduction is $375,000 for married couples filing separate returns.
- Real Estate Taxes
You can deduct up to $10,000 of the state and local income or sales and property taxes you actually paid to your local tax authority.
- Points
If you paid points to a borrower to secure a mortgage the cost can be deducted on your tax return.
Itemized Deductions vs. Standard Deductions
Under Tax Reform, the standard deduction for all filers was significantly increased. As a new homeowner, you will have to decide which is the larger – itemizing your deductions or taking the standard deduction.
2022 Standard Deductions |
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$12,950 |
- Single |
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$25,900 |
- Married Filing Jointly |
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$25,900 |
- Qualified Widow(er) |
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$5 |
- Married Filing Separate |
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$19,400 |
- Head of Household |
Mortgage Interest Credit
First time homebuyers may be eligible for the Mortgage Interest Credit designed to help low income purchasers. To qualify, you must meet certain income guidelines and get a Mortgage Credit Certificate (MCC) from your state or local Housing Finance Agency (HFA) before getting a mortgage and buying your home. Purchasers can claim a dollar for dollar tax credit for a portion of the mortgage interest paid per year, up to $2,000.

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