2023 Home Buyer Tax Credits & Deductions Every First Time Home Buyer Must Know! it’s springtime which is lovely but you know what’s not great tax season because I know you guys love saving money just as much as I do today I wanted to go through home buyer tax credits and deductions that you., Don’t want to miss so let’s get right into it if you have a mortgage on your home you can take. Advantage of mortgage interest deductions a mortgage interest deduction allows you to lower your taxable income by writing off the mortgage interest that you are paying throughout the year now with this of course there are deduction, limits for a single filer or if you are married filing jointly you, can deduct up to a maximum of 750 000 if, you are married filing separately it’s up to 375 000 for each party now with this obviously you know 750 000 is a big amount but keep in mind you’re, only going to be able to write off the amount that you already paid throughout the year, so if I didn’t pay 750 000 in mortgage interest tested then I’m not going to be able to write. That off I would just be able to write off up to what. I already had paid throughout the year or you know that limit if that is applicable to you the best part about this deduction in. My opinion is that this is something that you can take advantage of every single year because as long as you have a mortgage you are, paying mortgage interest that’s where you know your interest rate comes into, play every single month a portion of that payment goes straight to the bank in interest and you can write that off a home equity loan is essentially a second mortgage on your house with a. Home equity loan you’re able to access the equity that you have in your home and use, it as collateral. For borrowing funds against your home now if you have these you may be able to deduct the interest that you’re paying on this as.
Well there are a few rules with this the first thing is this applies to both the home equity loans and the helocs the home equity line of credits but you can only make.
This deduction if you borrowed funds 2 pay for.
A home improvement so if you went to the bank and you’re like I want to take out a HELOC and I’m going to use that fund for a boat you’re. Not going to be able to write that off so the money that you pull from this has to. Be used for a home improvement if you are, hoping to write off the interest you’ve paid over the year against your, taxes I know that’s a little tricky so if you have questions about this consult a tax professional I am not a tax professional or CPA consult those people if you have questions when you take out, a mortgage to buy a house you have the option to, purchase discount points to lower your interest rate you can also deduct discount points, there are limits to this as well points can only be deducted if they were purchased to reduce. The mortgage interest rate so the cost of the points can be deducted so you get the extra amount that you paid to bring down your interest rate.
And bring down your monthly payment can be deducted if these are points that. You used towards a loan origination in a point that cannot be deducted with the deduction available for discount points discount points paid will be reflected on your settlement statement or your HUD closing.
Disclosure so if you’re not quite sure if you paid those for your closing or bought down your interest rate review your closing disclosure. And you’ll find that information this would just be applicable to people who have, bought a house in 2022 because those are, the taxes that you’re working on a not so fun aspect of owning a home is property taxes obviously as a homeowner you’re subject to in most cases both federal and state property. Taxes depending on your location. Property tax deductions can be extremely valuable so there are deduction limits with this if you are married filing jointly you can deduct up to ten thousand dollars on, your taxes because of the amount you paid in proper taxes if you are single or married filing separately that is up to five.
Thousand dollars of course you’re not going to deduct more than, you personally paid so look at those numbers yourself this is like the maximum did you guys know that necessary, Home Improvements can also qualify for deductions but there are some caveats here if you decide to go ahead and upgrade your fully functioning kitchen obviously that would not qualify, as a necessary Improvement so what are some qualifying examples, Home Improvement for medical reasons is the main one here that would be necessary for the medical care of somebody living in the house so.
Some examples are a wheelchair ramp widening the doorways in a home installing a special shower or rails in the bathroom. If there’s any modifications needed for a staircase because of somebody those, are all necessary improvements that could be deducted when.