It’s hard to believe it’s been nearly a year since the Covid-19 pandemic began and changed the way we live, work and play. Although tax filing deadlines were extended last year due to the pandemic, this year, the deadline is back to its usual April 15 date. As you prepare your 2020 taxes, here are a few housing-related items to keep in mind.
Home interest deductions.
- Mortgages that closed before Dec. 14, 2017: A married couple filing jointly and single filers can deduct mortgage interest on a combined debt limit of $1 million.
- Mortgages that closed after Dec. 14, 2017: For both primary residences and second home loans, mortgage interest can be deducted on a combined debt limit of $750,000.
Property tax deductions.
Taxpayers who itemize can only deduct up to $10,000 on a combination of state and local property, income and sales taxes. This applies to property taxes on your primary residence, a vacation home and undeveloped land.
Capital gains tax exclusions.
Married-joint filers can exclude up to $500,000 and single filers can exclude up to $250,000 when selling their primary home, provided they’ve lived there two of the past five years.
Those are just a few of the housing-related tax laws. Please consult your tax advisor for more information on how these and other tax deductions may apply to you.
To stay updated on what’s happening in your market, or for professional guidance through the process of buying or selling a home, contact your Long & Foster agent.