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Tax Benefits When You Buy a House

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Purchasing a home can bring you really good benefits in paying taxes. Keep in mind that now you need to feature your tax-deductible expenses in Form 1040 and Schedule A. There are the following possibilities:

  • The interest you pay towards covering a mortgage is deductible. In case the loan amount is more than $1 million, your deductible interest will be limited.
  • If you use the equity in the first home to buy a second one, this equity debt is also deductible.
  • If you pay points to make your interest rate better, you should search for more detailed information to get a full deduction of these points.
  • Property taxes can also be deducted. These taxes go into an escrow account for payment once a year. You should include this amount and loan interest information on the annual statement received from a lender to get an annual deduction.

Do not forget that you can have some other deductible options, so you should better look for extra information depending on your particular situation.

Find some more information whether Home Equity Loans Taxes are Deductible.