Tax Benefits of Homeownership
Congratulations on your decision to purchase a home for the first time! As you embark on this exciting journey, it's essential to learn about the many tax benefits of owning a home.
Did you know that by owning your home and using it as your primary residence, you're eligible for various deductions that can save you money? These deductions include mortgage interest, mortgage points, property taxes, home office, home modifications, and tax credits.
You may be able to deduct the interest on your mortgage payment, which is a huge win, especially at the beginning when most of your payment goes towards interest. Additionally, if you pay points to reduce your interest rate, you can deduct this cost from your taxes if certain criteria are met.
Deductible taxes are calculated based on the location and value of your property. Selling your home also won't require capital gains tax if the appreciation is under $500,000 (if filing as a married couple) or $250,000 (if filing as a single person).
If you are self-employed, you can deduct your home office if you file your taxes as such. Also, the cost of home modifications for medical reasons can be deducted from your taxes if the expenses exceed 7.5% of your adjusted gross income.
There are also tax credits available to homeowners such as Mortgage Tax Credit and Energy Tax Credit. By installing electric car charging stations or energy-efficient improvements, you can enjoy these tax credits.
With so many options available to you, it's always best to consult with a tax professional to determine which deductions and credits apply to your specific situation. Don't miss out on these fantastic tax benefits of owning a home!