Tax Advantages of Owning a Home
A mortgage is a big liability, but it can also provide some tax advantages that make it a smart financial tool. Here's why:
- A home mortgage is a tax-deductible interest expense.
- IRS rules say you can deduct the interest expense on up to $1 million ($500,000 for married filing separately) of home-secured debt used to purchase or make capital improvements on your qualified principal and/or second residence.
- If you pay points on your mortgage, these can be deducted in the year you pay them for an original mortgage.
- Property taxes are also income tax-deductible.
Talk to your tax advisor about how a mortgage might benefit your tax situation.