If you own a home – or you’re considering buying one – then you may already be aware that there are some tax breaks available to you. But with the new tax laws that are now in place, it is important to know what is and isn’t allowed for deductions.
Starting with the 2018 tax year, there are some key tax-related items to be aware of. These include allowable deductions or tax credits for:
- Home mortgage interest payments. The home mortgage interest tax deduction can be claimed on interest that is paid for a first and / or second home. According to the IRS, a qualified residence loan is considered a mortgage that is secured for purchasing a primary residence, a second home (i.e., a vacation home), a home equity line of credit, or a home equity loan. The deduction of the interest on these loans is based upon the date the mortgage was secured, as well as the amount of the loan, and the way in which the funds from the loan are used.
- Points paid when securing a home mortgage. Oftentimes, lenders will charge points for securing a home loan. These can help to reduce the interest rate on the mortgage. You are allowed to deduct all of your mortgage points in the year that the points are paid – provided that the loan is used for building or purchasing your primary residence and the loan is secured by the property.
- Residential energy efficient property savings. If you made energy saving improvements to your home, such as the installation of earth-friendly energy sources, you may be allowed to take advantage of a tax credit that is worth up to 30% of the total cost of installing these energy sources in the home.
If you’re thinking about buying and / or selling a home in the Ventura County or Bakersfield, California, area, then give us a call. We’ll work with you throughout the entire process, starting with creating a step-by-step plan.