Tax Benefits to Owning a Home

EVERYTHING

The last thing you probably want to be thinking about right now is taxes. The good news is that there are tax advantages to owning a home. Home ownership comes with significant tax benefits. Always consult with a tax professional to determine your individual tax liability. Homeowners may qualify for both tax deductions and tax credits. Here is a basic overview of the tax advantages to home ownership.

Tax Deductions

  • If you have never owned a home before, you may not be aware of this but you can write off the mortgage interest paid on your loan. For individuals the limit is $500,000 and for married couples filing jointly, the limit is $1 million. Tax deductions are also allowed for interest paid on a refinance loan, home equity loan, or home equity line of credit though restrictions may apply if your mortgage debt is greater than the fair market value of your home.
  • If you purchased a home with less than a 20 percent down payment you were probably required to carry mortgage insurance to cover the lender. If so, you may be eligible to write it off if your adjusted gross income is under $110,000.
  • Property taxes also qualify as a tax write off which can save you several thousand dollars each year.
  • If you took out a loan to purchase property or to refinance your property you may have paid discount points to lower your rate. If so, these points may be a deduction though subject to certain criteria. Consult with your tax adviser if you paid discount points to determine your eligibility.
  • Some home improvements are tax deductible such as renovations to accommodate a disabled or chronically ill person. Again, consult with your tax professional for more information. Typically renovations to improve your home are not tax deductible though some may qualify. You don’t want to miss out if you are eligible for this deduction.

Tax Credits

  • First time home buyers are eligible for a tax credit if they received a mortgage credit certificate before purchasing their home.
  • Energy saving improvements made on a home may qualify for tax credits as well.

Other Things to Consider

Capital gains are profits made on the sale of real estate. If the property you purchased is your primary residence you are often eligible for exemptions in your capital gains tax. You can claim an exemption of $250,000 for individuals or double that amount for married couples filing jointly.

For more information go to www.irs.gov

Anthony Coleman, Realtor, Top Guns Real Estate

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s