If you decide to itemize your taxes like I did, there are some great deductions you can take when you own your home. You probably already know you can deduct your mortgage ^[2] interest, but what are some other items you can deduct? I don’t know about you, but I can use all the deductions ^[3] I can get.

^[4] (Hint: If you use H&R Block At Home ^[5] like I did, you’re already on top of these deductions)

Homeowners CAN deduct:

Late charges

Late payment charges and pre-payment penalties are eligible to be deducted from your taxes so long as they were not for a specific service received in connection with your home loan.

Property taxes paid during the year

You can also deduct any property taxes you reimbursed to the seller at closing. These are the funds the seller had already paid into escrow before you took ownership. This amount will be on your mortgage ^[2] settlement sheet but you won’t get a 1098.

Mortgage interest on a second home

The mortgage ^[2] interest on a second residence is also deductible within limits.

Interest on an equity loan

The interest on $100,000 (or less) borrowed on a home equity loan or home equity line of credit, regardless of the reason for the loan, is also deductible.

Mortgage Points

If you paid mortgage ^[2] points when you purchased your home, those are also deductible, but if you refinanced, you have to spread that deduction over the life of the loan .

Private Mortgage Insurance (PMI)

You can deduct PMI in 2009, but only for policies dated after 2006. (The right to this deduction disappears as Adjusted Gross Income rises from $100,000 to $110,000 (or $50,000 to $55,000 for those who use married filing separately status.)

Home improvements required for medical care

If you had to make changes to your home for medical care, such as installing a wheelchair ramp or making a doorway wide enough to accommodate your wheelchair, those expenses could also be deductible.

Homeowners CANNOT deduct

Homeowners insurance

Premiums paid for your homeowners insurance ^[6] is not deductible on your federal taxes.

Homeowner’s Association Dues

Yeah, they’re expensive and sometimes you wonder how they’re spent, but HOA dues are not deductible.

Maintenance and repairs

Maintenance items like lawn care, pressure cleaning, carpet cleaning, maid services, or HVAC maintenance are not deductible. Repairs are not deductible either.

Improvements

Improvements you make to your home are not deductible now, but if you save those receipts for improvement expenses, you can deduct them from the profit you make from selling your home.

Appraisal fees

If you had your home appraised, those expenses are not deductible.

As always, be sure and verify the deductibility of all your expenses with a qualified tax advisor.

Photo by R. Clock ^[13]

About the author

Ron has written 1082 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[14] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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