What Can I Itemize on Taxes for a New Homeowner?
by Solomon Poretsky
Home ownership can reduce your taxes.
One of the biggest benefits of buying a home is that you get to write off essentially all of the interest that you pay on your home's mortgage. The IRS lets you write off the interest on up to $1 million of mortgage debt that you incur to buy your home or that you incur to improve your home. You can also write off the interest on an additional $100,000 in home equity debt that you take out for any reason. These writeoffs are especially valuable right when you buy your house since almost your entire mortgage payment goes to interest, making almost all of it deductible.
You can also deduct all of your property tax expenditures as a part of your itemized deductions. With property taxes starting at 1 percent of the
value of your home in California, this usually adds up to thousands of dollars a year in additional tax deductions. While you write off your mortgage interest by including it on line 10 of your Schedule A, you take the property tax writeoff on line six.
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