Real Estate Tax Deductibles

Here you will find an overview of deductibles you can use in relation to Real Estate.  For more information, or advice, contact a CPA or tax attorney.

Click here to return to The 3 D's of Real Estate Tax.

1.     Mortgage Interest- The interest paid on a balance of up to 1 million dollars can be deducted. 

2.     Private Mortgage Insurance-  If a homeowner pays PMI, it can be a deduction.

3.     Home Improvement Loan interest- The interest on $100,000 and lower loans can be deducted.

4.     Mortgage Points- An origination fee or mortgage points that a homeowner paid to obtain a better interest rate can be deducted. 

5.     Energy Efficiency Upgrades- The cost of energy saving materials can be deducted directly from your taxes instead of your taxable income.  

6.     Real Estate Profit- The profit of a real estate sale can be claimed as tax free.  Individuals can claim up to $250,000 and married couples can claim up to $500,000.

7.     Real Estate Selling Cost- Any profit exceeding the aforementioned maximums are taxable.  However, you can add up fees paid at closing, the cost of improvements, marketing costs of selling your home, etc... 

8.     Home Office-  Having a home office is deductible.  The room must be solely used as an office and it must be the primary location you get your work done.  Each SqFt is a $5 deduction, up to 300 sq ft.  

9.     Property Tax- As confusing as it sounds, you can actually deduct your property tax.  Effectively, property tax is different than income tax and you can write off the property tax to reduce your taxable income. 

10.  Loan Forgiveness- The Mortgage Debt Forgiveness Relief Act of 2007 allows the forgiven debt after a short sale that took place between 2007 and 2013 to be tax free. In other words, if you sold your home in a short sale process and got $50,000 but owed $75,000 and the bank forgave you the $25,000.  The government views that $25,000 as taxable income. The aforementioned act forgives the tax on the $25,000.

11.   Depreciation-  Click here for more information.