Real Estate Tax Deductions
deductions make tax season slightly more palatable
There are tax benefits for home owners who file a tax return with itemized deductions can realize. These are the basics. If you decide to file an itemized tax return a good CPA is your best friend.
1. mortgage interest
Most buyers get a mortgage to buy a home. Monthly mortgage payments are made up of two parts; principal & interest. In the early years of a loan the majority of the monthly payment goes towards the interest which is tax deductible.
2. property taxes
Real estate taxes paid to state & local agencies can qualify for a deduction on tax returns. If your real estate taxes were paid by your mortgage company through an escrow account you can find the amount you paid on your mortgage statement. If you pay directly to the city you can find the amount here.
3. capital gains
If you sell a primary residence that you have lived in for 2 of the past 5 years you are exempt from paying income taxes on the profit. A single person is exempt from paying income taxes on the first $250,000 in profits from the sale. A couple filing jointly is exempt from paying income taxes on the first $500,000 in profits from the sale.
Here is the list from the IRS of all deductions & credits as well as the eligibility guidelines.