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Real Estate Tax Topics

First-Time Home Buyer

Are you a first-time home buyer? There are tax benefits that come with homeownership; learn which ones you can claim.

There is a tax benefit to home ownership – the ability to itemize deductions and 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.

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.
Tip/Help

Ask your state or local Housing Finance Agency (HFA) about the Mortgage Credit Certificates (MCC) available in your area.

Itemized Deductions vs. Standard Deductions

Under Tax Reform, the standard deduction for all filers has been significantly increased. As a new homeowner, you will have to decide which is the larger – itemizing your deductions or taking the standard deduction.

2018 Standard Deductions

$12,000

 - Single

 

$24,000

 - Married Filing Jointly

$24,000

 - Qualified Widow(er)

$12,000

 - Married Filing Separate

$18,000

 - 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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