What tax deductions are involved in homeownership?
MORTGAGE INTEREST: Your biggest tax break is reflected in the house payment you make each month, since the bulk typically goes towards interest. All of that interest is deductible, unless your loan is more than $1.1 million, then the IRS limits your deductibility. If you have taken out a loan to purchase a primary and/or second home, or if you have taken out a loan to improve either a primary or second home, you can deduct the interest on any combination of these loans up to $1 million. This means you could buy a home for $250,000, a beach home for $200,000, and add a family room to your first house for another $100,000, and still have $450,000 to spend on these homes for further improvements before you reached your limit for interest deductibility.
