Learn seven great tax deductions you may be able to use if you’ve bought or sold a home this year. Owning a home means you may be elgible for deductions and credits for origination fees, mortgage interest, property taxes, and more.
Hello, I’m Victoria from TurboTax with seven great tax deductions you may be able to use if you’ve bought or sold a home this year.
Deduction number one: You can write off mortgage interest from the year of the purchase to the year of the sale or until the mortgage is paid off.
Number two: You may deduct loan origination fees, loan discounts, discounted points or maximum loan charges in some cases.
Number three: If you sell your home and pay off your mortgage early, your lender may require you to pay a prepayment penalty, but you can deduct it as part of your mortgage interest.
Number four: Real estate taxes paid at a settlement or closing. Taxes you pay based on the assessed value of your property are deductible.
Number five: When you sell your home, you can add all costs associated with major home improvement done since the purchase of your home to your cost basis, which reduces the tax on gains made from the sale.
Number six: You can reduce your taxable gain when you sell your home by deducting the total amount of your selling costs including real estate broker's commissions, title insurance, and more.
And number seven: Tax law gives you a big tax break when you sell your home if you have lived in the house for at least two of the five years before the sale. Usually, a single homeowner can take up to $250,000 of profit tax-free and a married homeowner can take up to $500,000 of profit tax-free.
For more tips and information to help you get your taxes done smarter, visit TurboTax.com.