Tax Information for Homeowners

Individuals may receive income tax advantages from home ownership. Certain of these areas are briefly described in this article.

Interest & Property Tax Deductions

Mortgage interest paid on a qualified residence or on a home equity loan is generally fully deductible as an itemized deduction. Property taxes are fully deductible as an itemized deduction for the year in which they are paid by the homeowner or by the mortgage company for the homeowner.

For prepaid interest or "points" paid on a home mortgage loan for the purchase or improvement of a principal residence to be deductible as interest in the year incurred, the points must be paid with funds other than those obtained from the mortgage lender. Points that are withheld from loan proceeds are not fully deductible in the year paid. They are deducted over the period of the loan.

Non-Recognition of Gain from Sale of Residence Once-In-A-Lifetime Exclusion

Some or all of the gain from the sale of a principle residence can be postponed if a new principal residence is bought or built within two years before or after the sale of the old residence.

The above statements should not be regarded as offering a complete explanation of the federal tax laws in these areas. We recommend that a CPA or financial advisor be consulted whenever a real estate transaction occurs.