How to Get More Tax Deductions for Homeowners

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Homeowners can take advantage of many tax deductions that are available to them. The Internal Revenue Service (IRS) gives a lot of ways to reduce your tax bill each year, making it worthwhile to learn about them and claim those tax deductions. Here are some to help you keep more money in your pocket.

The Mortgage Interest Deduction

The tax deduction for mortgage interest on a primary residence is less than it once was, but the IRS says you can still deduct the interest on the first $750,000 if you are married filing jointly or $375,000 if married but filing separately. If you had mortgage interest before Dec. 16, 2017, you can deduct the mortgage interest on the first $1 million.

If you have refinanced a mortgage, NerdWallet says you can get a tax deduction, but it depends on the original loan date. If you took out the loan before Oct. 14, 1987, you may be able to deduct all of the interest.

Interest on Home Equity Loans

When the money from a home equity loan or a home equity line of credit (HELOC) is used to improve the home, you can deduct the interest. Money from these loans used for other purposes cannot be deducted. NerdWallet mentions that money from these loans counts as part of your mortgage debt, so if it exceeds that limit, you cannot deduct it.

Mortgage Points

The cost of buying points on a mortgage may also be tax deductible. It is added to your mortgage interest. People who meet specific qualifications, the IRS says, may be able to deduct the entire amount in a single year.