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April 15, 2010 may have come and gone, but homeowner tax deductions live on! It’s never too soon to start planning for next year. Let’s get started.

While owning a home may sound expensive or overwhelming, the truth is homeowners are actually eligible for a huge list of perks when it comes time to do your taxes.  If you’re thinking about becoming a first-time home buyer, be sure to check out this list of deductions so you have a good idea of what to expect when you buy your first home.  If you already own a home, good news – we’ve got a list of the most important deductions right here to help you get the most money back possible.

Before we begin, it’s important to note that 1) you should always talk to a tax professional to make sure these deductions apply to you, and that 2) these deductions only apply if you are itemizing your deductions – and not claiming the standard deduction.

1.  Mortgage Interest

If your mortgage is relatively new (as in you’re nowhere near paying it off yet), chances are the bulk of your monthly payments are still going towards interest, which is tax deductible.

Confused?  Check out your amortization schedule that should be part of your closing packet.  You’ll notice that in the early stages of your loan repayment schedule, the majority of your monthly mortgage payment is going towards interest, and a small amount towards the principal.

As time goes on, this distribution shifts to having the majority of your payment going towards the principal and small amounts towards the interest.  If you haven’t reached this break even point yet (the point when it shifts over to mostly principal), then you have quite of bit of mortgage interest to deduct.

Keep in mind that the entire interest is deductible only if your loan is under $1 million – which unfortunately, is the majority of us.

Another perk is that mortgage interest on a second home or second mortgage are also tax deductible.

2.  Points

Did you pay points during a refinance or purchase?  More good news – you can deduct points in the year you paid for them.  However there are a few conditions tied to this one, like the fact that your loan needs to be for buying or building your main home and buying points has to be a common practice in your area.

If you got a home equity line of credit, and used the money towards securing a mortgage by buying points – those points are also tax deductible.

3.  Property Taxes

With fallen property values, the first thing to do is to make sure you’re not being overcharged on your taxes.  After all, when your property value goes down, so should your taxes in most cases.  Check out our awesome article on this topic if you need more information on how to fight your taxes.

Assuming you’re being taxed the correct amount, the next thing to do is to deduct them on your returns.  You should get an annual statement from your lender which tells you how much of your monthly payments were actually for property taxes.  Generally, out of your mortgage payments, a portion of your payment is actually being escrowed to pay property taxes.  The annual statement will tell you how much you paid over the year.

If it makes more sense for you to take the standardized deduction, keep in mind that you can still claim this one for up to $500 if you’re single and $1,000 if you’re married and filing jointly – just use Schedule L.

So there you go, the three most important deductions just about every homeowner can expect to get.  If you don’t already have a home – you’re missing out, after all, who doesn’t love spending hours figuring out how to maximize the money they get back from the government?

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