As a California homeowner, here are three California homeowner tax deductions you should know about.
Mortgage Credit Certificate (MCC)
For people buying their first home in California, incentives and tax credits are offered including the MCC program. For qualified buyers, tax credits are given through a portion of mortgage payments. The MCC allows qualified buyers to deduct 10-50% of their interest; however, it differs depending on where you reside, and in California the state housing authority allows buyers to deduct up to 20% from federal income tax liabilities, even though the program is run by individual counties. For those who itemize their returns, a tax deduction on the 80% remaining interest can be taken.
Mortgage Interest Deductions
Not only have mortgage interest deductions been adjusted this year, but the interest is also tax deductible. Instead of debt of $1 million (or $500,000 if married and filing separately), these limits have been changed to $750,000 of debt (or $375,000 if married and filing separately).
Property Tax Deductions
This year the property tax deduction is subjected to a $10,000 cap. This includes local, state, and sales tax paid throughout the year (or $5,000 if married and filing separately).