How much of my mortgage payment is tax deductible?

• For mortgages made before December 14, 2017, interest on debt used to buy, build or improve your primary or second home (called acquisition debt), as long as mortgages totaled $1 million or less ($500,000 if single or married filing separately). For mortgages made after this date, the limits are $750,000 / $375,000.
• Mortgage insurance (or funding fees for government loans) for loans taken after 2006 as long as your adjusted gross income does not exceed $100,000 for a married couple (half that for singles and those married filing separately)
• Property taxes on first and second homes (if you itemize your deductions). Starting in 2018, the amount of property tax you can deduct is capped at $10,000.

I sold my home this year. Will I owe capital gains tax?

As long as the property was your principal residence for at least two of the last five years, you can exclude $250,000 of your profit ($500,000 for married couples) from your federal taxable income. If you profited less than the $250,000/$500,000 threshold, no extra form is required. You can do this as often as every two years.

If you made a higher profit or otherwise don’t qualify for the exclusion (say, you sold after just one year), you’ll generally owe up to 23.8 percent in federal taxes on your gains over and above the “excluded” amount. (Your actual rate will vary depending on your income.)

I lost money on the sale of my home. Do I get to deduct the loss?

Loss on the sale of a personal residence is treated like a loss on the sale of any personal property. It is not deductible. Losses on investment properties are deductible.

Are my closing costs tax deductible?

You can claim a deduction for real estate taxes you paid as part of your mortgage closing costs. Starting with 2018, this amount will be capped at $10,000. The same goes for prepaid interest. It will be included on the 1098 form your lender sends you.

What happens with points on a refinance?

This deduction is often overlooked, and it could be worth a lot. When you pay points on a refinance, they have to be prorated.

For example, if you paid $3,000 in points on a 30-year mortgage, you can deduct $100 a year for 30 years. But if you refinanced again this year and have prorated points that have not yet been deducted — for example, you are 10 years into a 30-year loan and have only deducted $1,000 of $3,000 in points paid — you can deduct the remaining $2,000 in the year you refinance.

Can I deduct prepayment penalties?

Prepayment penalties paid on a mortgage are tax deductible in the year that they are paid.

Does the Obamacare tax affect gains from property sales?

The 2010 “Obamacare” Affordable Care Act added an extra 3.8 percent tax on capital gains incurred by certain high-income taxpayers.

If you fall under the law’s requirements, you’ll have to pay 23.8 percent in federal income taxes on your home-sale profits over and above the $250,000/$500,000 exclusion rather than the 20 percent rate that you’d otherwise face.

However, this extra tax only applies to single or head-of-household filers who have a $200,000 adjusted gross income or married joint filers with a $250,000 adjusted gross income. And remember, the first $250,000 of a single taxpayer’s profits ($500,000 for joint filers) is federally tax free.

What expenses am I NOT allowed to deduct from my income?

Unless your property is a rental or investment, you don’t get tax breaks for the following:

• Hazard insurance
• Homeowners association dues
• Principal payments
• General closing costs like appraisal fees or title insurance
• Local assessments to improve your neighborhood