The IRS defines a home as any house, condominium, cooperative, mobile home, boat, or similar property that has sleeping space, toilet facilities, and cooking facilities. Homeowners may qualify for the following deductions.
You can deduct real estate taxes assessed on all the U.S. real estate you own. You are not limited to the tax on just one or two homes.
If you borrow money to buy, build, or substantially improve your main or second home, the mortgage interest may be claimed as an itemized deduction.
Your lender will generally give you Form 1098, Mortgage Interest Statement, to tell you how much interest you have paid for the tax year.
A home mortgage is any loan secured by your main or second home, including first and second mortgages, home equity loans, and refinanced loans. The loan must be legally recorded, with the home as collateral for the debt. You must be legally liable to make the payments. For example, if you borrow money from your parents to make a down payment on your home, you cannot deduct the interest you pay them unless the loan is legally recorded with the home as collateral.
You may generally deduct the mortgage interest on your main home and a second home, up to the limits described below.
Debt that is refinanced generally retains its character as acquisition or home equity debt, up to the old loan balance.
Terms such as points, loan discount, loan origination fees, etc., refer to certain charges you might pay in order to obtain a mortgage. If you pay points to borrow money, the points are deductible as prepaid interest.
You may need to make home improvements in order to provide medical care for yourself, your spouse, or your dependent. Examples: (1) Lifts or elevators, (2) therapy pool for help with a specific medical condition, (3) bathroom or countertop modifications to accommodate a person with a disability, (4) ramps, handrails, support or grab bars, (5)modifications to halls and doorways.
An expense may generate a medical deduction to the extent the expense does not result in an increase to the home’s value. Not every expense results in such an increase.
Operation and upkeep. Amounts you pay to operate and maintain a medically-related home improvement qualify as medical expenses, if the main reason is for medical care. This is true even if only part or none of the asset cost qualified for a deduction.
If your home is damaged or destroyed in a disaster area declared by the President, you may have a casualty loss. Losses are calculated on Form 4684, Casualties and Thefts.
DISCLAIMER: This article contains general information for U.S. taxpayers and should not be relied upon as the only source of authority. Seek out professional tax, legal, or financial advice from CryptoTaxAudit or from other reputable companies.