Marriage Filing Statuses

• If only one spouse owns a home, for the couple to benefit from the related house deductions, they must file jointly. By filing jointly, each spouse's income, deductions and credits are combined into one return, creating one taxable income and liability. If a couple files separately, each person files taxes on the income they personally earned and claim the deductions and credits on the property and activity that they participate in, with jointly earned deductions being divided between the couple. While seemingly obvious that both spouses should claim home ownership tax benefits, there could be situations where filing separately and having the homeowner be the sole beneficiary of the deductions may be more advantageous. Therefore, you should complete joint and separate returns to see which option provides you with the lowest tax burden.
  
  

Deductibility of Mortgage Interest

• If you use your house to secure a loan, any interest you pay on that amount is generally deductible. If the debt is from before October 13, 1987, all interest related to a debt secured by your home is deductible. If the debt is from after this date, there are some limitations. If the money from the loan is used to purchase or improve the home in question, the interest is only deductible if the value of the total debt taken on the home is less than $1 million. If you took out a loan on the home for any other reason, the interest is deductible only if the debt is less than $100,000, or $50,000 if you are married filing separately. If you exceed these limits, only a portion of your interest is deductible. Mortgage interest can only be deducted if you itemize your return.
  
  

Real Estate Taxes

• Deductible real estate taxes are annual levies issued by state and local governments based on the assessed value of real property. To qualify as deductible, the taxing authority must charge a flat rate on all property, and the tax cannot be a payment for a special right for the landowner or for service rendered by the state or local government. To deduct the amount, you need to have actually paid the tax during the tax year in question. To claim this deduction, you need to complete Schedule A, and write down the amount of real estate taxes paid on line 6 of that form.
  
  

Tax Tips and Disclaimer

• For complex returns, consult with a tax professional, such as a certified public accountant (CPA) or licensed attorney, as he can best address your individual needs. Keep your tax records for at least seven years to protect against the possibility of future audits.
  
  Note: Every effort has been made to ensure this article's accuracy, but it is not intended to be legal advice.