Tax Breaks for Taxpayers Who Detail – Cross Timbers Gazette | Denton County South | mound of flowers
Whether you bought a home, refinanced your current home, you may be able to take advantage of tax breaks for taxpayers who detail. Here’s what to keep in mind:
Deduction of state and local income, sales and property taxes
The deduction taxpayers can claim for state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 to $5,000 if they are married and file separately. State and local taxes paid above this amount cannot be deducted.
Refinance a house
The mortgage interest deduction is limited to interest paid on a loan secured by the taxpayer’s primary or secondary residence. Homeowners who choose to refinance must use the loan to purchase, build or substantially improve their primary or secondary residence, and the mortgage interest they can deduct is subject to the limits described in the “buying a home” section below. .
To buy a house
People who bought a new home in 2021 can only deduct mortgage interest paid on a total of $750,000 ($375,000 married deposited separately) in qualifying debt for a first and second home. For existing mortgages, if the loan originated on or before December 15, 2017, taxpayers can continue to deduct interest on a total of $1 million of eligible debt secured by primary and secondary residences.
Donations to a qualified charity are also considered tax relief. Taxpayers who itemize deductions can take advantage of a temporary suspension of charitable contribution limits (CARES Act of 2020) that allows them to deduct cash donations to public charities up to 100% of adjusted gross income (AGI) . Normally, the deduction limit for cash contributions is 60% of the AGI.
Interest expense on investments
Investment interest expense is interest paid or accrued on a loan or part of a loan that is applied to property held for taxable investments – interest on a loan you took out to buy stock in a brokerage account, for example. Taxable investments include interest, dividends, annuities or royalties.
Wondering if you need to itemize deductions on your 2021 tax return? Feel free to contact Lindsey Lee at 972-318-1040 or visit www.TaxFixNow.com to schedule an appointment.