Whether you are a current home owner, getting ready to seal the deal, or still weighing your options between renting and buying, knowing what type of tax benefits you will receive, as a home owner, can make all the difference.
Mortgage planning specialist Rick Cirelli has outlined tax advantages of home ownership below. Please consult with your personal financial adviser or accountant to obtain full understanding of all available tax benefits and conditions and visit Rick Cirelli’s website at rtcmortgage.com to view additional mortgage planning information.
Typical Tax Deductions For Homeowners
Mortgage Interest: One of the biggest tax incentives to owning a home is that the interest you pay on your mortgage is tax deductible, up to $1 million. This deduction applies to any kind of home, including a second home under certain conditions.
Real Estate Taxes: Homeowners can deduct the local property taxes paid each year, too. This applies to principal homes and any others you may own.
Points: If you (or even the seller) paid points to the lender to secure your mortgage, you may be able to deduct those points on your taxes.
New And Temporary Deductions
$8000 For First Time Buyers: Just when you were figuring out the $7,500 tax credit for first time buyers, Congress changed the rules and is now offering an $8,000 tax credit – and guess what? Buyers won’t have to repay it unless they sell their homes within three years.
Mortgage Insurance Premiums: Thanks to Congress, MI premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
New Standard Deduction: Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying taxpayers who don’t itemize but pay property taxes, get up to a $500 extra deduction; married filing jointly get up to $1,000.
Special Incentives
Tax Free Profits On Sale: When you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, twice that if you’re married, and not owe any capital gains taxes.
Other Benefits: Ask your tax professional about penalty free IRA payouts for first time buyers, home improvement deductions, energy credits, and even moving expense deductions.
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