| It is well known that home ownership allows many | | | | those limiting conditions do not apply to most |
| income tax advantages that those who rent do not | | | | homeowners. |
| receive. Two of those key deductions pertain to the | | | | Another noteworthy deduction comes from your |
| mortgage interest and property taxes paid during the | | | | property taxes. These taxes are deductible if they |
| tax year in question. Although there are many other | | | | are charged uniformly against all property and based |
| deductions when buying or selling a home, we will | | | | on the assessed value. Be aware that some states |
| focus on those that you receive during home | | | | and counties impose local special assessments for |
| ownership as an owner-occupant. | | | | community improvements, such as for sidewalks, |
| The most significant deduction comes from the | | | | streets, or sewer lines. Although these items are also |
| mortgage interest you pay throughout the year. | | | | based on your property's assessed value, they are |
| Most likely your loan is "fully amortized" which means | | | | not deductible. |
| a portion of your monthly payment repays the debt | | | | Also, charges for trash collection or homeowner |
| and a portion is applied toward the interest. The | | | | association assessments are not deductible. However, |
| portion which is applied to interest will typically be | | | | there are some local property taxes that are used |
| shown on a Form 1098, Mortgage Interest | | | | for maintenance, repair, or interest charges related to |
| Statement, which is the annual statement sent to | | | | these benefits. These taxes would be considered |
| you from your lien holder. This amount is your | | | | deductible, but a careful analysis of your tax records |
| deductible interest, providing you meet certain | | | | is recommended to ensure proper documentation of |
| conditions. Please note, if your loan is | | | | your deductions. There are also deductions allowed |
| "grandfathered", which means you obtained it prior to | | | | for points paid to obtain your mortgage loan or to |
| Oct. 13, 1987, all of your interest is considered | | | | refinance an existing mortgage. Don't get this |
| deductible. Any loan obtained thereafter must meet | | | | confused with loan origination fees that are not |
| certain conditions to be fully deductible, but luckily, | | | | deductible but sometimes referred to as points. |