Although property owners are not eligible for any tax credits, they can take deductions for both interest paid and property taxes paid, notes both the Tax Policy Center and the Internal Revenue Service. The amounts that are available for deduction vary from year to year.
Property owners who decide to itemize deductions can take a specific deduction for interest paid on the home mortgage, notes the Tax Policy Center. This deduction is subject to certain limitations imposed by the Internal Revenue Service. It is only available to those who own a home and does not apply to any rental property. Taxpayers can deduct mortgage interest by completed the itemized deduction Form 1040 Schedule A, notes the Internal Revenue Service.
Homeowners also have the option of deducting property taxes paid, notes the Internal Revenue Service. To deduct these taxes, a homeowner must have paid at either settlement, at closing or to a taxing authority, notes the Internal Revenue Service. Certain rules govern whether the seller or buyer is eligible to deduct property taxes when a property transaction occurs. Generally, the owner of the property for the longer period during a specific tax year is eligible to deduct the associated property taxes. Topic 503 issued by the Internal Revenue Service states that property tax deductions are listed on Schedule A as an itemized deduction.