Five Tax Opportunities for Homeowners
Owning your own home has many advantages. Some of the benefits of home ownership is financial. Here are five tax opportunities for homeowners. Note with any tax information talk to your tax experts to evaluate how it will impact your personal tax situation.
- Mortgage Interest Deduction: This has long been one of the most valuable deductions for homeowners, especially with a new mortgage where the payments consist of mostly interest.
- Home Improvement Loan Interest: The same way your mortgage interest is deductible, so can be the interest on a home improvement loan. Consult your tax adviser because some wear and tear items such as carpet and paint may not qualify.
- Mortgage Points/Origination Charges: These charges are treated similar to interest on the loan, making them deductible. Consult your tax adviser because the deduction is treated differently depending on if the charges were for a refinance or a purchase.
- Energy Efficiency Upgrades: Up to 10 percent of the improvement cost can be applied as a tax credit, which is a direct reduction in the amount of tax you owe. There are a wide variety of items such as energy efficient appliances, furnaces, insulation, and windows. Be aware that this credit does max out at $500.
- Capital Gains Exemption: If you were to sell a home and realize a profit you can claim that profit tax-free. Be aware there are many requirements for the exemption, such as the home must have been your primary residence for 2 out of the last 5 year.
Fortunately, there are some great tax advantages for owning a home. In addition to having a place of your own these tax breaks help make home ownership affordable. If you want to find your own home contact Coffee Real Estate to find that perfect home for you.