Mortgages are one of the items that have seen the greatest increase in recent years in the United States. This facility has enabled many Americans to become homeowners, although it is true that not all Americans can access this facility.
Once our mortgage is accepted, we have a monthly payment to make, so we need to have a stable income in order to be able to afford one. Problems can arise if we have certain expenses that are not deductible, as there are others that homeowners can deduct from their taxes.
Be that as it may, it is really important to be aware of all the details. If we have the possibility of deducting something, it is advisable to do so, but it is true that this is not always the case. To be clear about this, it is best to look at the list of non-deductible expenses for homeowners so as not to get the wrong idea.
Non-deductible expenses for homeowners
Although there are expenses such as state and local real estate taxes that can be deducted, as well as home mortgage interest, there are others that cannot. However, if we know all this information in advance, we will be able to plan perfectly and thus enjoy our home to the full.
When filing our tax return, according to the official IRS website, we cannot deduct the following expenses as homeowners:
- Insurance including fire and comprehensive coverage and title insurance.
- The amount applied to reduce the principal of the mortgage.
- Wages paid to domestic help.
- Depreciation.
- The cost of utilities, such as gas, electricity or water.
- Most settlement or closing costs.
- Forfeited deposits, down payments or earnest money.
- Internet or Wi-Fi system or service.
- Homeowners’ association fees, condominium association fees or common charges.
- Home repairs.
Thus, these expenses must be assumed in their entirety by the homeowner, so we cannot think of deducting them at any time. In any case, it is true that there are some aspects related to the mortgage that we can deduct, as we have already mentioned, so we must take this into account when evaluating our finances.
What is the best tax deduction to homeowners?
Without a doubt, mortgage interest is what represents the biggest tax deduction for homeowners. It is true that there are limits, but there is no doubt that they can represent enormous help if we can really deduct it from our taxes.
The limit in this sense is up to $750,000 of mortgage. If we have a mortgage greater than that, we will not be able to deduct more taxes in this regard, since that is the established maximum. Therefore, if we calculate our own mortgage we can realize that we can deduct a large amount of money each year as homeowners.