Are you wondering what kinds of tax deductions you’re eligible for after buying a home in 2021? Even if you bought in previous years, paying a mortgage makes you eligible for certain savings. In this post, we’ll be covering a few tax deductions for both scenarios.
Disclaimer for Tax Deductions
Before we get started, please understand this is just a general overview and does not constitute legal, tax, or financial advice. Speak with your your accountant or tax professional for your specific situation. For more information on any of the following and more, you can check out IRS Publication 936, Home Mortgage Interest Deduction.
Interest Tax Deductions
When you receive your yearly mortgage statement, look for the form 1098. This form will outline all the payments made to the principal as well as interest. The buzzword you’re looking for is pre-paid interest. Bring this form in when you file your taxes and ask if there is a deduction for you in it.
Property Tax Deductions
These are the monies paid to the government for owning your residence. The taxes go towards things like funding the local police department, local fire department, and local schools. If you decide to itemize your deductions, these may be eligible as well!
Points Paid to Reduce Interest
Upon applying for a loan, whether a purchase OR a refinance, your lender probably asked you if you wanted to reduce your interest rate by paying extra money, called points. If you did do this, your may be eligible for a deduction. Another thing to remember is that it doesn’t matter if you were the one to pay them! For example, during a purchase, if you were able to negotiate that the seller bought points for you on your behalf, you could be eligible for this deduction!