Tax breaks for life's big events
Buying a home
Your home is probably your biggest investment. Homeownership also provides many tax breaks.
Interest paid on a primary residence mortgage up to $1 million is deductible as an itemized expense. If you take out a home equity loan or line of credit, interest on those loans up to $100,000 also is deductible. Even the interest on a second home is tax deductible.
Property tax you pay on your main house and any other residences you own also is deductible.
The tax benefit of a home is even better when you sell it. Up to $250,000 in sales gain ($500,000 for married joint filers) on your home is tax-free as long as you owned the property for two years and lived in it for two of the five years before the sale.
Many home improvements, such as structural additions, kitchen modernization and landscaping, can increase the basis in your home. This is essentially your investment in the home. A larger basis means less profit that might be taxable.
And some home upgrades, such as installing solar energy systems, also will get you an immediate tax credit to help offset the high cost of this type of improvement.