Mortgage Interest Deductions

If you own a home or are thinking about buying one in the near future, you should know about mortgage interest deductions, which basically allow you to subtract any income you spend paying interest on your mortgage loan from your taxable income, which will end up reducing how much you have to pay in taxes.   

In the early stages of owning your home, this nice little “bonus” of lowered taxes can really help. Don’t get too used to it, though, because as your interest is reduced over time, your deduction will also get reduced. However, saving something is always better than saving nothing, right?

Of course, some exceptions do apply. To start with, you’ll only enjoy this break on up to two homes and only on the first $1 million of any mortgage. That’s because this benefit was designed to help lower to middle class citizens and to make home ownership more attainable and more beneficial to them. On a nice note, other, similar deductions and credits are available to help make home ownership a little bit easier on the average wallet!

One great deduction is the real estate tax deduction, which lets you deduct property taxes on your home from your taxable income. Again, this benefit is good for up to two homes. To learn more about other potential benefits of home ownership and how to take advantage of and make the most of them, be sure to talk with your tax adviser.

It’s especially smart to speak with a tax professional even before you buy a home so that you can go ahead and plan your budget with all possible savings factored in, but, even if you’ve already made your home purchase, it’s never too late to take advantage of the options available to you!