Editor’s note: This is a transcript of the audio file.
Being a homeowner isn’t always easy, but it can make paying your taxes a lot easier on your wallet. I’m Lucas Wysocki with your Bankrate.com Personal Finance Minute.
The biggest tax break for homeowners comes in the form of the mortgage interest deduction. As long as your mortgage is less than a million bucks, you can deduct every penny of interest paid throughout the year off of your taxable income. This is also true for any interest paid on home equity loans or lines of credit.
Points, those extra dollars you pay at closing to lower your interest rate, are also deductible. Just remember, when you buy a home, points are deductible all at once; but on a refi, points may have to be deducted over the life of the loan; check with a tax professional to be sure.
Finally, any state or local taxes you pay on your home, including property taxes, are also deductible. And remember, to take advantage of these potentially huge tax savings, you’ll have to drop the 1040EZ in favor of a long-form 1040 with a Schedule A. For more on this and other personal finance issues, visit bankrate.com. I’m Lucas Wysocki.