Many people don’t realize that there are great Tax benefits to owning a home that you don’t get while you are renting.
In addition to the value of Home Ownership you can also save money over renting depending on your income and tax situation. If you run the numbers you may find that Owning a Home can be more beneficial to you than Renting. These great tips are brought to you by GuidetoLenders.com
1. Home Mortgage Interest
If you have a mortgage on your primary residence, the interest you pay may be fully tax-deductible. Check with a professional tax advisor to see if you qualify.
2. Points Paid at Closing
Investigate whether you are able to deduct points paid at closing when buying a home. Whether the seller has paid for the entire amount or contributed towards the total, you may still be eligible for a deduction.
3. Tax Breaks for Mortgage Refinancing
You may be able to write-off the points paid through mortgage refinancing. Remember that the deductions are spread out over the term of your home loan. Points from previous refinances that have not been fully deducted may be eligible as well.
4. There are No Income Taxes on Capital Gains
The 1997 Taxpayer Relief Act states that a single homeowner can realize a tax-exempt profit of up to $250,000, once every two years. Married taxpayers who file jointly are entitled a tax-exempt profit of $500,000. The seller must have owned and occupied that address as a primary residence during any two of the last five years.
5. Mortgage Tax Credit
Low-income first time homebuyers can benefit from a home buying program called mortgage credit certificate (MCC). This allows participants to benefit from a mortgage interest tax credit of up to 20% of the mortgage interest payments made on a home. The credit amount varies by jurisdiction. This credit is available each year you maintain the mortgage loan and live in the house purchased with the certificate.
6. Real Estate and Property Taxes
Local and state property taxes are often deductible against your income. Check with your professional financial advisor. If you are eligible for real estate tax-deductions, remember that these are only deductible in the year in which they were paid to the government.
7. Home Office
If you work from home, or have office facilities at home, which you use for the purpose of paid work, you might be able to deduct the costs associated with maintenance. It does need to be a qualified office, however, so check your circumstances with a qualified financial advisor.
Additionally, you may find that costs such as painting, cleaning, utilities, and garbage also qualify.
8. Moving Related Expense
If you are moving because you need to relocate for the purposes of your employment, you might find that certain expenses are tax-deductible. These expenses may include travel, household packing, and vehicle relocation. Ask a professional qualified advisor about limitations.
9. Home Improvement related to Health
If you need home alterations due to a chronic health problem or disability, the expenses associated with altering the home may be tax-deductible. There are certain conditions that must be met-(e.g., the alteration does not add value to your property and it must be a medically related alteration). The cost of installing a wheelchair ramp is one example of an expense that may qualify for this deduction.
10. Vacation Home
Some of the costs associated with owning a vacation home, such as personal property taxes, real estate taxes, points and mortgage interest can often be deducted.
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