One of the many reasons to become a homeowner is because of the financial advantages it can provide. When you own your own property, it allows you to establish a permanent place of residence which provides the opportunity to build equity – the value of a homeowner’s interest in their home, or in other words, the part of your home you actually own –and it also allows you to lock in your monthly costs for as long as you live there.
Being a homeowner can especially be to your financial benefit during tax season – there are many opportunities for potential tax breaks for those who own their own home. As tax-filing season comes to a close, and as you prepare your taxes for the year, here are five possible tax breaks that homeownership can potentially provide for you. (Make sure to consult your tax professional regarding any questions on deductions, eligibility, and any potential tax breaks that may be available to you!)
1) Mortgage Interest: One incentive of owning a home is to reduce your taxable income by deducting the interest that you pay on your mortgage. If you purchased your home after December 15th, 2017, you can deduct interest paid up to $750,000 if you file jointly, and $375,000 if you’re filing singly. Points paid on your mortgage may also be able to be deducted from your taxes.
2) Private Mortgage Insurance: If you didn’t put a 20% down payment on your home, you’re likely paying Private Mortgage Insurance (PMI) until you reach a 20% investment in your home. If you took out a loan in 2007 or later, you may be able to deduct your PMI payments on your taxes.
3) Property Taxes: As a homeowner, you can deduct property taxes you are paying for your home.
4) Medically Necessary Improvements: If you are making home improvements due to a medical need for yourself or a member of your family, such as installing medical equipment, widening doorways, adding a ramp, or railings and support bars, you may be able to deduct the cost of those improvements and the maintenance on your taxes. Appropriate documentation will be needed to prove the additions are due to a medical necessity.
5) Home Office: Are you one of the many people who have made the transition to working from home in the last couple of years? You may be able to deduct home office expenses if your office is a dedicated workspace used exclusively for your business.
To find out more about what potential tax breaks you could qualify for as a homeowner, and for more information on the above, reach out to your tax professional. If you’re ready to pursue homeownership and all the potential benefits, financially and otherwise, contact one of our real estate sales professionals today!