Maximizing Your Tax Refund: Essential Benefits for Homeowners This Tax Season

Tax time is here again in the United States! Between January 27 and April 15, the IRS expects to receive over 140 million tax returns. It’s a good time for homeowners to look at ways to get some money back through tax benefits.

Buying a house costs a lot of money. That’s why many people look for loans with good terms. To help, the IRS offers credits and deductions that can lower how much income you’re taxed on, which means you pay less in taxes. 

While many people know about the mortgage interest deduction, there are other tax breaks for homeowners that might not be as well known.
 

Understanding Tax Breaks for Homeowners

For homeowners, tax breaks mainly come through deductions. These deductions lower your taxable income, which means you end up paying less in taxes. 

When filing taxes, you can choose the standard deduction, which is $14,600 for single filers, $29,200 for married couples filing together, and $21,900 for heads of households. Or, you can itemize deductions, which can include your mortgage interest, state taxes, and donations to charity.

To go for these homeowner deductions, you need to itemize on Schedule A of your Form 1040. The choice between itemizing and taking the standard deduction depends on whether your itemized deductions are more than the standard deduction amount. 

Tax credits, which lower your tax bill directly and don’t require itemization, are another way to save.
 

Mortgage Points Deduction

When buying a house, you can lower your mortgage rate by buying discount points. Each point usually lowers your interest rate by 0.25%, depending on the lender. 

These points, which the IRS sees as prepaid interest, lower the amount of interest you pay over the life of your mortgage and are deductible. You can include what you paid for these points as mortgage interest on Line 8 of Schedule A, Form 1040.

Check out: New First-Time Home Buyer Tax Credit Proposal Aims to Help Prospective Homeowners
 

Getting the Most Out of Tax Savings

These tax benefits are there to help homeowners manage the financial load of owning a home. Whether it’s through mortgage interest deductions, tax credits, or discount points, these savings are worthwhile. 

By reviewing all your options, you can maximize your refund before the April 15 deadline.

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