Owning a home can have several tax benefits. These benefits can include deducting the interest you pay on your mortgage, the cost of repairs and improvements made to your home, and even the property taxes you pay each year.
If you’re looking for a way to reduce your taxable income, owning a home is one way to do it.
Here is a list of the tax benefits you can enjoy if you own a home.
Mortgage Interest Deduction
If you buy a home or spend money on home improvements, you can deduct the interest of the loan or renovation costs from your taxable income. To qualify for this benefit, your mortgage principal loan should not exceed $750,000, according to the 2017 Tax Cuts and Jobs Act or TCJA. This tax benefit also applies to your second home, and vacation homes with certain limitations.
Mortgage Insurance Deduction
Private mortgage insurance, or PMI, is a type of insurance that protects lenders if a borrower defaults on their home loan. If you pay private mortgage insurance (PMI), you may be able to deduct the cost from your taxable income.
State and Local Tax Deduction (SALT)
As a homeowner, you pay local and state taxes on your home. But the good news is you can also deduct the taxes you paid from your federal taxable income. The SALT deduction allows you to subtract a portion of your property, sales, or income taxes paid to state and local governments from your taxable income.
Profits on Your Home Sale
Home sale exclusion allows a homeowner to exclude up to $250,000 of gain from the sale of their home. To qualify, the homeowner must have owned and used the home as their primary residence for at least two years out of the five years preceding the sale. The exclusion can be used once every two years.
Residential Energy Credit
The purpose of this tax benefit is to encourage businesses and individuals to invest in energy efficiency, which can help to reduce greenhouse gas emissions and save money on energy costs. To take advantage of the tax benefits, businesses and individuals must meet certain requirements, such as installing certain types of equipment or making improvements to their buildings.
Home Office Deduction
If you use part of your home for business purposes, you may be able to deduct the cost of the home office from your taxable income. To qualify for this deduction, you must use a specific area of your home regularly and exclusively for business.
Save on Taxes When You Buy a Home
Owning a home can have several tax benefits. These benefits can include deducting the interest you pay on your mortgage, the cost of repairs and improvements made to your home, and even the property taxes you pay each year.
Are you starting your journey as a homeowner? Get in touch with us at Trusted Property Advisors to get expert advice in choosing and financing your home.
Owning a home can have several tax benefits. These benefits can include deducting the interest you pay on your mortgage, the cost of repairs and improvements made to your home, and even the property taxes you pay each year.
If you’re looking for a way to reduce your taxable income, owning a home is one way to do it.
Here is a list of the tax benefits you can enjoy if you own a home.
Mortgage Interest Deduction
If you buy a home or spend money on home improvements, you can deduct the interest of the loan or renovation costs from your taxable income. To qualify for this benefit, your mortgage principal loan should not exceed $750,000, according to the 2017 Tax Cuts and Jobs Act or TCJA. This tax benefit also applies to your second home, and vacation homes with certain limitations.
Mortgage Insurance Deduction
Private mortgage insurance, or PMI, is a type of insurance that protects lenders if a borrower defaults on their home loan. If you pay private mortgage insurance (PMI), you may be able to deduct the cost from your taxable income.
State and Local Tax Deduction (SALT)
As a homeowner, you pay local and state taxes on your home. But the good news is you can also deduct the taxes you paid from your federal taxable income. The SALT deduction allows you to subtract a portion of your property, sales, or income taxes paid to state and local governments from your taxable income.
Profits on Your Home Sale
Home sale exclusion allows a homeowner to exclude up to $250,000 of gain from the sale of their home. To qualify, the homeowner must have owned and used the home as their primary residence for at least two years out of the five years preceding the sale. The exclusion can be used once every two years.
Residential Energy Credit
The purpose of this tax benefit is to encourage businesses and individuals to invest in energy efficiency, which can help to reduce greenhouse gas emissions and save money on energy costs. To take advantage of the tax benefits, businesses and individuals must meet certain requirements, such as installing certain types of equipment or making improvements to their buildings.
Home Office Deduction
If you use part of your home for business purposes, you may be able to deduct the cost of the home office from your taxable income. To qualify for this deduction, you must use a specific area of your home regularly and exclusively for business.
Save on Taxes When You Buy a Home
Owning a home can have several tax benefits. These benefits can include deducting the interest you pay on your mortgage, the cost of repairs and improvements made to your home, and even the property taxes you pay each year.
Are you starting your journey as a homeowner? Get in touch with us at Trusted Property Advisors to get expert advice in choosing and financing your home.
