Mortgages Offer Tax Benefits
There are benefits to owning a home, especially at tax time. Homeowners can take a deduction of their interest and property taxes. In the past, taxpayers had to file the itemized tax forms to get the credit. In 2013 this deduction is available for all tax payers who own a home. There are benefits for renting, but the benefit from purchasing your home allows for a bigger write off of mortgage interest.
Owning your own home is a big responsibility. The government rewards homeowners with large breaks on their tax bill every year. Purchasing a home is ideal for families or even singles, which are staying in one area for a long time. Paying rent makes more sense for those who move around frequently, or who are living where they do not pay rent.
Real Estate Write Offs
Mortgage interest is not the only tax break that a homeowner is entitled to receive from the US Federal government.
- Some mortgages come with points. This is a benefit to the lender, and one for the borrower. One point is equal to 1% of the loan total. These points are tax deductable for the homeowner.
- Property taxes are also deductable. All states are different. Some charge personal property taxes. The rate your state charges will vary. This too is a real estate write off. The amount that can be claimed will also vary by state.
- Did you make home efficiency upgrades to your home? Home improvements such as adding insulation, roof and upgraded windows may be tax deductable.
- Did you sell your home? You may be able to deduct a certain amount of capital gains profit.
- Take the home office deduction if you work from home. There are restrictions and they do vary by state, but this is a deduction that a homeowner with a home business can take.
Homeowners receive the maximum deduction for the luxury of owning their own home. There are more deductions during the first year of homeownership. Always check with a tax specialist to determine your deductions.
Tax time comes but once per year. Getting a big refund from the federal government is icing on the cake for homeowners. Some deductions may only be available to taxpayers who itemize their deductions. The new tax regulations are allowing short form filers to take certain homeowner deductions. These may vary by state. Before taking any tax deduction, check with a professional realtor or tax preparer for the most recent deduction rules.
The important thing to remember is that there are financial and tax advantages for owning your own home. Most homeowners have a list of real estate write offs that can be claimed on taxes. Get the most out of your homeownership by collecting all the credits that are due to you.
(DISCLAIMER: WE ARE NOT TAX PROFESSIONALS, THIS IS NOT TAX ADVICE!!!)