Owning a home is a significant milestone, but did you know that it can also provide several tax advantages? As a potential homeowner, it’s essential to understand these potential tax benefits as they can lead to substantial savings and make homeownership more affordable in the long run. At Priority 1 Lending, we’re dedicated to providing the knowledge you need to make informed decisions about your financial future. Here are some key tax benefits you may enjoy as a homeowner.Verify my mortgage eligibility (Dec 1st, 2023)
- Mortgage Interest Deduction: For many, the biggest tax break from owning a home comes from deducting mortgage interest. Homeowners can deduct the interest paid on a mortgage debt of up to $750,000 ($375,000 if married filing separately). This is particularly beneficial in the early years of homeownership when the majority of your mortgage payments go toward interest.
- Property Tax Deduction: Property taxes are a substantial cost of homeownership. The good news is that homeowners can deduct up to $10,000 (or $5,000 for those married filing separately) of their property taxes.
- Home Office Deduction: If you use part of your home exclusively and regularly for business purposes, you may be able to deduct a portion of your home-related expenses, such as mortgage interest, property taxes, and utilities.
- Energy Efficiency Upgrades: If you make certain energy-efficient improvements to your home, you may qualify for a tax credit. These improvements could include installing energy-efficient systems or renewable energy sources, like solar panels.
- Home Equity Loan Interest Deduction: If you take out a home equity loan or line of credit and use the funds to buy, build, or substantially improve the home that secures the loan, the interest may be deductible.
- Mortgage Points Deduction: If you paid points to get a better rate on your home loan, you can deduct these points on your tax return. Mortgage points are prepaid interest and can be deducted as home mortgage interest.
- Capital Gains Exclusion: If you sell your home for a profit, you may be able to exclude up to $250,000 of the gain from your income ($500,000 for married couples filing jointly) as long as you have lived in the home for at least two of the last five years.
- Moving Expenses Deduction: While this deduction is mostly limited to members of the Armed Forces, it’s worth noting that if you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses.
Navigating these tax benefits can be complex, and it’s recommended to consult with a tax advisor or professional to fully understand how these potential benefits apply to your specific situation.
At Priority 1 Lending, we believe in empowering our clients with the knowledge they need to make the most of their homeownership journey. Our team of experts is committed to guiding you through every step of the home financing process and providing you with resources to help you make informed decisions.
Whether you’re just beginning your home buying journey or you’re ready to dive into the world of mortgages, we’re here to assist you. Contact Priority 1 Lending today and let us help you explore your options and understand the financial advantages of owning a home.Show me today's rates (Dec 1st, 2023)