Almost since our country was founded, Congress has consistently passed laws over the years to encourage individuals to purchase personal residences. As a result, homeowners get a number of tax breaks which are not available to people who do not own their own home. These tax breaks are worth knowing about if you are a homeowner now, or are considering buying a home in the future. Tax laws vary from year to year. Talk to your tax advisor for details on any of the concepts discussed here.
All interest paid on mortgage loans is tax deductible for both first and second homes.
Points and loan fees are often considered prepaid interest, and may be deductible in the year of purchase. All real estate taxes are tax deductible on personal residences. Part of most homeowners' monthly payments go toward real estate taxes which support our local governments. All of these tax payments may be deducted from your federal income taxes. This would increase their monthly take-home pay, and would be offset by these tax deductions.