Below is a list of deductions that are available to you related to your home:
Mortgage Interest Paid:
Generally, any interest that you pay on a home mortgage can be deducted on your return as long as:
- The proceeds from the mortgage were used to buy, build, or improve your home, AND
- The loan is secured by your main home or second home.
This includes interest for first mortgages and second mortgages, home equity loans, and refinanced mortgages. Generally, your lender will send you a Form 1098 with an amount in Box 1 listing the amount of mortgage interest that you paid.
A home can be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleeping space, toilet, and cooking facilities.
Real Estate Taxes:
You are allowed to deduct any real estate taxes (commonly called property taxes) that you paid on real estate that you own and did not use for business. This also includes taxes paid at closing when buying or selling a home. Keep in mind, you can deduct any qualifying real estate taxes that you paid to state, foreign, or local government agencies (such as your town office, county, parish, or other tax assessor).
Mortgage Insurance Paid:
Mortgage insurance is only deductible for tax years prior to 2022.
Another common deduction related to your home is Qualified Mortgage Insurance Premiums. The most common type of mortgage insurance premium is Private Mortgage Insurance (PMI). However, you can also deduct mortgage insurance paid to the Department of Veterans Affairs, the Federal Housing Administration, and the Rural Housing Administration (or their successor organizations). Your qualified mortgage insurance is usually reported on Form 1098, or a year-end statement.
Home Energy Credits:
If you purchased and installed qualifying energy-efficient property in your main home you may be eligible to take a tax credit. You must have purchased new energy-efficient equipment, and the equipment must be expected to remain installed for at least five years.
Here are a few common examples of home improvements that could qualify as tax credits: solar hot water heaters, solar electricity equipment, and wind turbines. The credit which runs through 2016, is 30% of the cost of qualified property. There is no cap on the amount of credit available, except for the fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the U.S.; fuel cell property qualifies only when installed on or in connection with your main home located in the U.S.
For more information, please review IRS Form 5695: Efficient Home Improvements.
Mortgage Interest Credit Certificate:
If you were issued a qualified Mortgage Credit Certificate (MCC), you may be eligible to claim a Mortgage Interest credit. To qualify for this credit, the MCC must have been issued by a state or local governmental unit or agency under a qualified mortgage credit certificate program.
D.C. First-Time Homebuyer Credit:
If you purchased a main home in the District of Columbia during 2008-2010, you may be entitled to an additional credit. See Form 8859. This credit is no longer available for current purchases but can still be carried forward from prior years when the credit was allowed.