A guide to tax breaks & deductions for new homeowners

by Roni Agress 07/02/2023

Tax breaks and deductions to be aware of as a new homeowner featured image

Buying a house is one of the largest purchases made within a lifetime. Along with the responsibility of owning a home comes some great perks, namely tax breaks and deductions. Knowing what these benefits are and getting a better understanding of them can help you take advantage of these perks during your homeowner journey.

Mortgage points

While earning points is great on the basketball court, it can be financially draining to a mortgage. Mortgage points are what buyers pay to lenders to secure a loan, usually given as percentage points of the total loan amount.

If you decide to pay these points during the closing of your home, then they are deductible. Taxpayers who itemize deductions on their IRS Form 1040 can usually deduct all the points they paid within the year, except for some high-income taxpayers whose itemized deductions are limited.

PMI costs

If you made a down payment of less than 20% on your home, odds are you may have to pay for private mortgage insurance until you pay off at least 20% of the loan balance.

The positive side is that homebuyers who bought their home in the year 2007 and after can deduct their PMI premiums. However, it’s best to make sure these deductibles are valid each year before filing your taxes.

Mortgage interest

Mortgage interest accounts for the largest tax deduction for most homeowners. When you receive the form 1098 from your lender, you can deduct the total amount of interest you’ve paid during the year.

Property taxes

Another deductible to not overlook is local property taxes. Consider saving the records for any property taxes you pay so that you can deduct them during tax season.

Home energy tax credits

Some states offer generous tax credits for homeowners who make home improvements to save energy. There are a number of improvements you might qualify for, including things like insulation and energy-efficient roofs as well as photovoltaic (PV) solar panels.

By keeping track of your mortgage payments and checking out your local credits, you can work with a tax expert to make the most out of your deductions during tax season.

Deductible

Property Taxes

About the Author

Roni Agress

Roni Agress brings to William Pitt Sotheby’s International Realty an accomplished and diverse history spanning three decades in entertainment management. Her experience, representing and assisting international performing artists and the administration of their production companies led to the establishment of her own firm in 1995. A passion for excellence, a strong work ethic and a commitment to getting the job done and an ability to anticipate, meet and manage is the foundation upon which Roni has built her career as a full-time realtor. As a resident of Redding, Connecticut since 1989, she possesses a detailed knowledge of the local markets, trends and values. Enthusiasm, vitality, resourcefulness and a can-do spirit accompany every transaction. Roni specializes in residential sales and relocation. She is an award-winning Realtor, an Accredited Buyer Representative and is Relocation Certified. • 2001 to Present – Sales Associate Ridgefield-Redding Brokerage • Gold Star, Silver Star, and Bronze Star Performance Awards – William Pitt Sotheby’s International Realty • #14 Company-wide in Units and #2 in Units in the Ridgefield Brokerage in 2013 • CT Magazine Five Star Performance Awards • 2011-2014 serving as a Director/Officer to the Ridgefield Board of Realtors