Tax season in the United States has started. From January 27 to April 15, the IRS expects over 140 million tax returns. Homeowners can take advantage of tax benefits to maximize refunds.
Buying a home is expensive. Many seek favorable mortgage terms. The IRS offers credits and deductions that reduce taxable income and lower tax payments. Mortgage interest deductions are well known, but other homeowner benefits often go unnoticed.
Key Deductions for Homeowners
Most tax benefits for homeowners come as deductions. Lower taxable income means lower tax payments. Taxpayers choose between the standard deduction—$14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for heads of household—or itemized deductions, which include mortgage interest, state taxes, and charitable donations.
To claim homeowner deductions, taxpayers must itemize using Schedule A of Form 1040. The decision depends on whether itemized deductions exceed the standard deduction. Unlike deductions, tax credits directly reduce the amount owed and are available even without itemizing.
Mortgage Points Deduction
Homebuyers can lower their mortgage rate by purchasing discount points. Each point typically reduces the rate by 0.25%, depending on the lender.
Discount points lower interest costs over the life of a mortgage. The IRS considers them prepaid interest, making them deductible. The amount paid for points is included as mortgage interest on Line 8 of Schedule A, Form 1040.
Maximizing Tax Savings
Tax benefits help homeowners reduce financial burdens. Mortgage interest deductions, tax credits, and discount points provide savings. Reviewing all options ensures homeowners maximize refunds before the April 15 deadline.
