Four Tax Tips for Homeowners in 2020
For most Americans, their home will be the biggest purchase of their lifetime. That big purchase comes with some big responsibilities like keeping the property in good repair and, of course, the long-term commitment of a mortgage. But there are some financial benefits, too.
One of the biggest financial advantages of a home purchase hit during tax season in the form of tax credits and deductions. To make sure you’re taking advantage of these benefits, we’ve put together a list of four tax breaks you can still claim as a homeowner in 2020.
Note: Ohio First Land Title is not a tax advisor! This list is a great place to start research on your tax benefits, but we recommend professional services for in-depth financial advice.
Mortgage Interest Deduction
If you purchased your home with a mortgage, the interest you pay on your loan is still tax deductible this year. What’s new for 2020?
The 2017 Tax Cut and Jobs Act changed how much mortgage interest is tax deductible. If you purchased your home after December 15, 2017, mortgages up to $750,000 qualify for this benefit (down from $1 million prior to the end of 2017).
Property Tax Deduction
State and local property taxes can increase cost of living exponentially — especially if you live close to a big city. Luckily, you can claim a hefty portion of your annual property tax bill as a federal tax deduction.
You can claim up to $10,000 of your total local and state property taxes on your federal return. For example, even if your state income tax and your local property taxes are each below the $10,000 on their own, the cap applies to the sum of the lower-level taxes.
Home Office Tax Benefit
If you own your own business or work 100% from home, you can claim your home office space as a tax deduction! This benefit is based on the size of your space — $5 for every square foot up to 300 square feet.
If your mortgage down payment was less than 20% of your purchase price, you’re likely paying for private mortgage insurance. New in 2019, the interest paid on that insurance is now tax deductible.
Adding this PMI to your other tax benefits may push you just over the $24,000 tax deduction benefit, leaving you with more money back on your federal tax return.