If you purchased your first home in 2014 you’ll soon be enjoying one of the true joys of home ownership. Tax season is here and it’s time to celebrate the home ownership tax benefits granted by Uncle Sam — and we’re not just talking about the tax deduction for mortgage interest.

Let’s take a look at how to maximize the tax advantages of deductible home-related expenses — including some you may not be aware of — and the ones that aren’t deductible.

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You can deduct: Mortgage interest

Financing your home purchase offers the biggest tax break. For most home owners, the biggest part of the monthly house payment goes toward interest. And, unless your loan is more than a million dollars, all of the interest is deductible. If your loan was over a million, it limits your deductible interest.

Interest tax breaks don’t end with your home’s first mortgage. Refinancing, a home equity line of credit and most equity debts of $100,000 or less are also fully deductible. Mortgage interest also is fully deductible on a second home — even a boat or RV — as long as they have cooking, sleeping and bathroom facilities.

You can deduct: Paid points

If you paid points to get a better rate on your home loans, they qualify for a tax break, too. The question is when you want to claim them.

You can deduct points in the year you paid them if, among other things, the loan is to purchase or build your primary residence, payment of points is an established practice in your area and the points were within the usual range. Make sure your loan meets all the qualification requirements so that you can deduct points all at once.

A homeowner who pays points on a refinanced loan is also eligible for this tax break, but in most cases, the points must be deducted over the life of the loan. The same rule applies to home equity loans or lines of credit.

And points paid on a loan secured by a second home or vacation residence, regardless of how the cash is used, are spread over the life of the loan.

There are more tax advantages to home ownership than just the tax deduction for mortgage interest.

You can deduct: Property taxes

Another major deduction in connection with your home is property taxes. When the property was transferred from the seller to you, the year’s tax payments were divided and your share of these taxes is also fully deductible.

These taxes are usually collected with monthly payments and held in an escrow account for payment once a year. The amount should be included on the annual statement you get from your lender, along with your loan interest information.

If you are going to sell your home, you can deduct: Taxes on the home sale

When you decide to move on to another home, or if you are considering moving soon, you’ll be able to avoid some taxes on the profit you make. Up to $250,000 in sales gain ($500,000 for married, filing jointly) is tax-free as long as you owned the property for two years and lived in it for two of the five years before the sale.

If you sell before meeting the ownership and residency requirements, you owe tax on any profit. The Feds allow prorated tax relief if the sale is because of a change in the owner’s health, employment or unforeseen circumstances like death, divorce, job loss or changes, multiple births from the same pregnancy.

A partial exclusion can be claimed if the sale was prompted by residential damage from a natural or man-made disaster or the property was taken by a local government under eminent domain law.

Second home sales also can provide some tax benefits, but you’ll owe tax on part of the sale profits based on how long the house was used as a second residence.

What’s not tax deductible

Simply because you’re required to pay mortgage insurance doesn’t mean you can deduct PMI (Private Mortgage Insurance) premiums. To qualify for a deduction, your mortgage must be for your primary residence or a second home that’s not a rental property, the loan was originated in 2007 or later, and your annual income is no more than $109,000.

Speaking of insurance, property or hazard insurance premiums are not deductible, even though the coverage generally is required for the home loan and is often collected with your monthly payment.

Other nondeductible residential expenses include:

– Homeowners association dues

– Any additional principal payments you make

– Depreciation of your home

– General closing costs and local assessments to increase the value of your neighborhood, such as construction of new sidewalks or utility connections and the repairs and upgrades you do on the home.

But hold on to the records and receipts of property improvements —  when you sell they could help reduce your taxable profit.

Be sure to follow our advice on how to benefit from all the available deductions for home-related expenses. You’ll find the tax deduction for mortgage interest expense is only one of the tax advantages of home ownership.

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