Tax Advantages Of Homeowners That Renters Cannot Get

Dated: 11/04/2016

Views: 354

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It's the last quarter of 2016; time to start thinking about the write-offs you are going to use for this year's taxes. Home ownership comes with some exemplary tax benefits. The benefits can be in the thousands depending on your specific situation.

The mortgage interest deduction

This deduction allows homeowners to deduct the interest paid on loans up to $1 million or less. This is especially helpful in the early years of your loan when payments mostly go to interest. 

Here is an example:

If you have a $250,000 30-year fixed rate loan with a 4.5% interest rate you would pay approximately $11,000 in interest the first year. A person in a 25% income tax bracket would save about $2,750 with this deduction.

Discount points

Interest rates can be reduced by purchasing "points". Each point usually costs 1% of the loan amount. 25% of these points can be deducted. If you purchased $2,000 in points, you would net a $500 tax savings. 

Property taxes

Property taxes paid on real estate are entirely deductible on federal income taxes. 

Mortgage insurance premium deduction

Loans with low-down payment options such as FHA and conventional loans with less than 20% down require mortgage insurance to protect the lender from default. Although this can make your monthly loan payment higher, it's great come tax time because it can be an itemized deduction from federal income taxes of those with an adjusted gross income of $109,000 or less ($54,500 if married filing separately).

Profits from a home sale

Tax benefits are not just for buyers! Sellers benefit too! Capital gains (profits) from a home sale are totally free from federal income tax up to $250,000 for individuals and $500,000 for joint filers. 

If you are thinking about  buying or selling a home in Kingman Arizona, give me, Amy Rodriguez Realtor, a call at 928-202-6149 or visit my website amy.az.queenteamhomes.com for more info. The Queen Team at Keller Williams Realty

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