March 15th, 2018
Being a homeowner definitely has its list of perks, including tax benefits. If you’re considering buying a new home, tax write offs are a noteworthy factor—especially as we enter into tax season!
Check out our list of tax benefits below:
Already a homeowner? There may be some tax breaks that you’re missing out on!
For many homeowners, your monthly loan (mortgage) payment includes a large portion of interest. Especially if you are in the first years of your mortgage loan. The good news is that the interest you pay is tax deductible which could potentially get you more money back in your tax return!
Deductions for paying property tax
In addition to your monthly mortgage, most homeowners are required to pay property tax on their home, which is also tax deductible—score! Added perk, homeowners may deduct interest paid on vacation homes as well. These include taxes paid to your county or town’s tax assessor (either directly or through a mortgage escrow account) on the assessed value of your property.
Home equity loan deductions
Do you have a home equity loan or line of credit? You may qualify to deduct the interest paid on these loans as well.
What is an equity loan or line of credit? This is a type of loan in which the borrower uses the equity of his or her home as collateral. The loan amount is determined by the value of the property, and the value of the property is determined by an appraiser from the lending institution.
Deductions on closing costs
Closing costs, also called origination points, are the fees paid on your loan at the time of purchase. Whether these were paid by you or the seller, these points are tax deductible (note, these costs are only tax deductible in the same tax year that you bought your home).
Having trouble finding your points? Here’s a great tip from TurboTax:
“The amount may be shown on a form you receive from your lender, if you pay your taxes through an escrow account. If you pay them directly to the municipality, though, check your records or your checkbook registry. In the year you purchased your residence, you probably reimbursed the seller for real estate taxes he or she had prepaid for time you actually owned the home.”
Have more questions about homeownership or tax benefits of owning a home? Contact one of our professionals today!