Owning a home invokes more than a sense of pride and freedom. It is also a long-term investment opportunity. With tax season here, it is a great time to speak to your tax advisor about the tax advantages associated with home ownership.
Death and taxes are said to be the only things you can count on in life, but add the favorable treatment of home ownership by the Internal Revenue Service to that list as well, at least for the foreseeable future.
In addition to the ability to claim the mortgage interest paid on your home as a tax break, other costs associated with owning a home are deductible as well.
Here are some items you should plan to discuss with your tax professional regarding the tax breaks commonly available to homeowners:
– Mortgage Interest Deduction: Interest you pay on a mortgage of up to $1 million – or $500,000 if you’re married filing separately – is deductible when you use the loan to buy, build or improve your home. Do not forget to include the per diem interest you paid at settlement for the interest to the end of the month – check line 901 of your HUD-1 settlement sheet for this figure.
– Prepaid Interest Deduction: Points you paid when you took out your mortgage is 100 percent deductible in the year you paid them. Check lines 801 and 802 of your HUD-1 to see if you have paid any points that might qualify as deductible.
– Property Tax Deduction: You can deduct the real estate property taxes you pay each year, as well as any property taxes paid at the time you closed the purchase of your house.
– Mortgage Insurance Premium Deduction: If you had to take out private mortgage insurance, the premium on that insurance can be deducted, as long as your income is less than $100,000 (or $50,000 for married filing separately).
For specific questions regarding all the tax benefits associated with owing a home consult a tax professional for advice and more specifics about how these deductions could lower your tax bill.
Wallingford PA Real Estate – Wallingford, PA 19086
