Owning a home may be more affordable and a better investment once you take the numerous tax benefits into account.  Below are home-related deductions you are entitled to as a Home owner. 

Even though the information is accurate at time written tax laws change continually.  I recommend that you consult a professional tax advisor or the IRS for answers to your Tax questions as they apply to your specific situation.

1.- Tax Rate Reduction

Tax deductions toward monthly home mortgage interest and property taxes which might put you in a different tax bracket.

                                         TAXABLE INCOME

SINGLE	MARRIED	TAX RATE
$0 – $7,300	$0 – $14,600	10%
$7,301 – $29,700	$14,601 – $59,400	15%
$29,701 – $471,950	$59,401-$119,950	25%
$71,951 – $150,150	$119,951 – $182,800	28%
$150,151 –  $326,450	$182,801 – $326,450	33%
$326,451 or more	$326,451 or more	35%

2.- Capital Gains

Homeowners who sell their principal resident do not pay capital gains taxes $500,000 if married and $250,000 if single.   The property must have been owned and used as their primary residence for any two of the prior five years.  

3.- Mortgage Interest

Interest payments on a residential (primary and second home) mortgage are fully deductible. If you own a third home for personal purposes, the mortgage interest is treated as a consumer loan interest and it is not deductible. 

4.- Points

Settlement charges for points are deductible expenses for home buyers.  

5.- Home Equity Loans

Interest on home equity loans (second mortgage, refinancing, credit line) is deductible with some limitations.  

6.- Tax Laws and Rental Properties

If you have an adjusted income of $100,000 or less you can deduct up to $25,000 in losses from rental real estate again income. If the income is between $100,000 and $150,000 you can still deduct some or all of your losses from rental  real estate depending on the amount of the loss.

7.- Job Transfer

If you moved to a new home because of a new job or a job transfer you might qualify for a moving expense deduction.   The distance between the old and the new job must be at least 50 miles more than the distance between the old home and the old job. 

8.- Vacation Homes

Vacation homes tax rules are based on the owner’s personal use days of the property.   It is considered a vacation home when the property was used personally more than 14 days or 10% of the days it was rented (if rented more than 140 days).  For a vacation home mortgage interest and property taxes can be deducted.  If there was rent income other property expenses might be deductible including depreciation (up to the amount of the rental income).

9.- Home Office

If you keep records, schedule appointments from your home office some common home office expenses (utilities, insurance, repairs, cleaning and depreciation) might qualify for a deduction.  If you use your home office for non-business purposes it cannot be claimed.  In order to be able to claim it must be exclusively used for business purposes.

10.- Depreciation

The taxes of the depreciation claimed on real property are:

a)       For a principal residence on which the depreciation was taken up to May 7, 1997 the gain is not taxable if it does not go over the $500,00 or $250,000.   If the depreciation was taken after May 7,1997 it is taxed as 25% tax rate.

b)       For a rental property or second home on which depreciation was take the gain equal to the depreciation taken I taxed at 25%. 

If you have been claiming depreciation  all the depreciation is subject to tax once the property is sold.