There are many financial benefits of homeownership, such as building equity and not paying rent to someone else. There are also many tax advantages available to homeowners, which makes now a fantastic time to buy a house.
Here are some of the tax deductions and benefits that are eligible to homeowners:
Mortgage Interest – When you become a homeowner, you gain the ability to deduct the year’s mortgage interest from your tax obligations. For most homeowners, their monthly mortgage payment is made up largely of interest, making this a large deduction.
Closing Costs – The year you purchase your home, you are able to claim the points paid on your home mortgage loan, even if the seller paid them. This savings can be significant, as many origination fees are 1% of the loan or more.
Property Taxes – Property taxes for your primary residence and/or vacation home are fully deductible from your tax obligations. The U.S. Census Bureau stated that the average household property tax is $2,127, so this deduction could be sizable.
Home Offices – If you work from home, your home office space and expenses are tax deductible. While up to 300 square feet can be considered an office space, there are strict rules regarding this deduction. Talk to a tax professional to learn what constitutes a tax-deductible home office space.
Green Home Updates – If you have made any energy-efficient updates to your home in the past year, those expenses are tax deductible. The Renewable Energy Efficiency Property Credit allows homeowners to claim various credit amounts for equipment costs of things such as solar panels, energy efficient windows, and wind turbines.
If you are interested in speaking to an accountant about the tax benefits that homeownership can provide to you, I would love to refer you to one of my business partners. If you are considering purchasing a home or refinancing your current house, call me today so that we can discuss your options!