What tax deductions can homeowners claim?

One of the biggest issues many consumers across the country may end up running into year after year when filing season rolls around is finding all the deductions that can serve to significantly limit liability and even result in a sizable refund in many cases. Fortunately for Americans who own their homes, they may be in line for a considerable number of deductions that can help them in their quest.

Perhaps chief among these is the mortgage interest deduction, which allows homeowners to write off all the interest payments they make on their existing mortgages, and can often be quite sizable, according to a report from the Tallahassee Democrat. Depending upon the terms of a consumer's loan, they might be able to write as much as 90 percent of their annual mortgage payments off, in addition to costs related to escrow, such as taxes. In many cases, the allowances afforded by this tax break alone may serve to lower a person's tax bracket altogether, and could therefore result in even more significant savings.

Moreover, consumers who own their homes can also deduct the property taxes they pay every year, the report said. Those paid to city, counties, school districts, and so on, can be cut from a taxpayer's federal liability, but those who bought their homes this year might be in a bit of a different situation based on how long they'd lived there. For example, if they bought the house in June, six months into the year, they would only be able to deduct half of the property tax bill given to the property.

Breaks for home sellers too
For consumers who sold their homes this year and turned a profit by doing so, there may be additional savings to be had, the report said. That additional money can come to them without having to pay capital gains tax on it provided they'd lived there for at least two of the last five years and their profit was less than $250,000 for individuals or $500,000 for couples married filing jointly.

In any case, it may be a good idea for homeowners and renters alike to consult with tax professionals on any annual filings they make, as a means of ensuring they're getting the maximum return they can from their circumstances.

For a more in-depth look at Liberty Tax Service, visit the Give Me Liberty! Magazine. Follow Liberty Tax on Facebook and on Twitter or contact Liberty Tax directly at 1-877-at-Liberty.