Homeownership can be such a positive thing. It builds equity, creates savings and allows you to build life-long relationships with your neighbors. But there are some major tax benefits that come with homeownership that might lead you towards these goals at an accelerated rate.
Are you interested in home ownership? Wondering what tax benefits would come with it? Take a look at this list of the top 10 tax benefits to homeownership (data provided by ListReports) and be better informed before making this big investment.
MORTGAGE INTEREST DEDUCTION
The interest you paid on your mortgage is tax deductible on up to $750,000 of mortgage debt. Look for the Form 1098 from your lender.
MORTAGE POINTS DEDUCTION
If you bought "points" (paying cash to the bank upfront in return for a lower interest rate), that amount is tax deductible.
MORTGAGE INSURANCE DEDUCTION
If you bought a home with a low down payment, you probably had to purchase private mortgage insurance. You can likely deduct these payments.
MORTGAGE CREDIT CERTIFICATE
A tax credit (issued by local or state authorities) of up to $2,000 for lower-income families that qualify.
PROPERTY TAX DEDUCTION
State and local property taxes (SALT) paid of up to $10,000 can be deducted from your federal taxable income.
HOME OFFICE DEDUCTION
Expenses associated with dedicated work from home space can be deducted.
RESIDENTIAL ENERGY CREDIT
Just installed solar panels? You can claim a tax credit for the equivalent of 22-26% of the installation cost.
TAX-FREE PROFITS ON YOUR PRIMARY HOME SALE
You'll pay no capital gains taxes on profits of up to $250,000 if single and $500,000 if filing jointly.
HOME IMPROVEMENTS CAN REDUCE CAPITAL GAINS FURTHER
The money you spent on improvements gets added to the initial cost of your property, reducing the size of your capital gains on sale.
1031 TAX-DEFERRED EXCHANGE (for investment properties)
You may be able to defer the capital gains on the sale of an investment property if you quickly buy a property of equal or greater value.
Left with questions on how to financially obtain your dream home? Reach out to our experienced lending team today and let us match you to the perfect loan product! Our experienced team is licensed to lend in North Carolina, South Carolina, Virginia, Tennessee, Florida, and Alabama! Just reach out to us using one of the methods below, and we look forward to talking with you soon!
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