Home Ownership Tax Benefits
Many home buyers are surprised to learn that there are numerous tax advantages to owning a home. Who knew all those mortgage payments and home repairs could pay off?
That's right. Here's a few ways that you can use your home ownership as an advantage when April 15th roles around.
Mortgage interest is tax deductible. So long as you itemize on your tax return, the money you pay out during the year that goes towards mortgage interest can be deducted from your taxes.
Home equity interest is tax deductible. Up to $100,000 in interest paid on a home equity debt can be deducted.
Real estate taxes are tax deductible.
An example of Tax Savings
Say you own a $200,000 home. You purchased it last year. Your monthly payment on the mortgage is $1,200, of which $300 is interest. That means over the course of 12 months, you paid $3,600 in mortgage interest. You also had to write a check to your city or state for real estate taxes, totaling $2,200.
On your end of the year tax returns, you can deduct the total of the mortgage interest paid ($3,600) and the real estate taxes ($2,200).
$3,600 + $2,200 = $5,800.
That's $5,800 less money that will be included in your taxable income!
For further tax savings earned through home ownership, please check out the IRS website.