February 23rd, 2012
1. Write off the interest you paid on a mortgage up to $1 million, as long as the property is your main or secondary residence. This deduction really pays off during the first few years of owning a home, when interest accounts for most of your payment, also known as home acquisition debt.
2. Deduct the interest you pay on home equity loans of up to $100,000, so long as you are not subject to the alternating minimum tax or AMT (unless you use the loan for home improvement).
3. Deduct your state and local property taxes from your federal income taxes, where applicable.*
4. Deduct your home buying expenses, including loan origination fees, prorated interest on a new loan, or prorated property taxes.*
5. If you sold your home in 2011, you may not have to pay federal income taxes on the earnings from the sale, up to $250,000 for single filers and $500,000 for joint filers, as long as you used the home as a primary residence for at least two of the five years prior to selling. Some states, including California, offer this as well.
6. Rent your home out for up to 15 days and keep the income generated – it’s not taxable.
*Not an eligible deduction if you are subject to the AMT.