7 Great Tax Benefits for Homeowners
Owning a home is one of the best financial decisions you can make. Experts agree that investing in real estate is one of the most reliable ways to grow your wealth.
One of the biggest financial perks of homeownership is the way it helps at tax time. Keep reading to learn more about the tax benefits of homeownership.
Any interest you pay on your mortgage will become a tax benefit for you. You can deduct interest up to $750,000 as a married couple filing jointly, to $375,000 as a single filer from your taxable income.
While the amount varies by state, you will likely be able to deduct a significant portion from your taxable income when you look at your property tax bill. Some states allow you to deduct most or all of your property taxes.
Home Equity Loan Interest
If you have a home equity loan, one of the tax benefits you can enjoy is deducting the interest you have paid on that loan. Much like your mortgage interest, interest paid for a second mortgage or home equity line of credit will benefit you when you go to pay your taxes.
Private Mortgage Insurance
If you put less than 20% down on your mortgage, you will almost certainly be paying Private Mortgage Insurance or PMI. You will be allowed to deduct what you have paid in PMI from your taxable income. This is one of the simplest tax benefits for homeowners.
Not all home improvements will apply, but if you make necessary improvements that keep your house up to code and fully functioning, you may be able to deduct the costs of those renovations from your taxable income. Deducting home improvement costs is one of the best tax benefits for homeowners.
This may also apply if you made improvements to your home to accommodate a medical need, such as adding railings or widening doors and hallways to make them wheelchair accessible.
Home Office Expenses
If you operate a business from your home, your business costs may help you at tax time. This deduction is not for people who work remotely for another business or who work from home for their business some of the time. It benefits people who own a business that is primarily operated from their primary residence.
When you sell your home for more than you paid for it, the profit you make is called capital gains. In other words, if you bought a home for $200,000 and sell it for $300,000, you have a capital gain of $100,000.
If you have lived in the home for at least two years as your primary residence, you will be exempt from capital gains tax for profit up to $250,000 for single filers, or $500,000 for married couples filing jointly.
Owning a home is one of the best choices you can make to benefit yourself financially, even when it comes to paying your taxes. To find out how we can help you become a homeowner, contact us today!