Tax Benefits of Owning a Home
Home ownership confers multiple tax-related benefits which should be maximized to the full extent possible. The following article provides an excellent primer for those who currently own a home or are considering purchasing a home as one’s primary residence. There are other tax benefits and strategies for investment properties but those aren’t the focus of this current article.
For starters, one can deduct the interest on a loan that does not exceed $1 million. Points to reduce one’s interest rate are typically deductible as well. In addition, the interest on a second mortgage in the form of a home equity line of credit (heloc) is usually deductible as long as the loan doesn’t exceed $100,000. According to the article, private mortgage insurance (PMI) is also deductible but only if your income is under $109,000 a year. That said, there are products out there allowing for a lower down payment (under 20%) without the PMI requirement. The other main deduction home owners benefit from is property taxes. The article also touches upon the $250,000/$500,000 exclusion upon the sale of your home, determining your home’s cost basis, and other rules governing this important exclusion.
Contact your CPA
This article is for informational purposes only. Always be sure to check with your CPA to get specific tax-related information that relates to your personal situation. If you don’t have a CPA or a go-to tax professional, the KASA Real Estate team can help. We work with a highly qualified CPA, Ted Grandbois, who provides free tax consultations by phone. Check out Ted’s bio here: KASA TEAM. Contact us and we’ll be sure to set up a call for you.
Read the full article here: How owning or selling a home affects your taxes