Homeownership has always been the “great American dream”. And Congress — with one exception — did not take it away when it passed the tax reform bill last December.
To foster and encourage this dream, Congress has consistently enacted — or preserved — tax legislation which favors homeowners. Indeed, much has been written that our tax laws discriminate against renters, by giving unfair and unequal tax benefits to those who own homes.
Every four years, some candidate for high political office tries to focus our attention on equalizing the tax laws, and repealing the homeowner benefits, but these arguments have consistently fallen on deaf ears.
For those of us who own homes, here is a list of the itemized tax deductions available to the average homeowner. Every year, you are permitted to deduct the following expenses:
Taxes. Real property taxes, both state and local, can be deducted. The one exception referenced above: tax filers can deduct on Schedule A any combination of state and local property taxes and income or sales taxes but only up to a total of $10,000. Interestingly, married couples who file their own separate tax return can only deduct up to $5000.
However, it should be noted that real estate taxes are only deductible in the year they are actually paid to the government. Thus, if in year 2018, your lender held in escrow moneys for taxes due in 2019, you cannot take a deduction for these taxes when you file your 2018 tax return.
.Mortgage lenders are required to send an annual statement to borrowers by the end of January of each year, reflecting the amount of mortgage interest and real estate taxes the homeowner paid during the previous year.
Mortgage Interest. Interest on mortgage loans on a first or second home is fully deductible, subject to the following limitations: acquisition loans up to $1 million, and home equity loans up to $100,000. If you are married, but…