Tax Breaks for Homeowners
Here’s the truth – there is no federal tax deduction for paying monthly rent. But as a new or potential home buyer, you’ll be pleasantly surprised to learn about the many tax deductions available to homeowners. By investing you tax refund towards a down payment on a home, you could save that you’ll get more in return (cue: ba-dum-ching!). Let’s take a look at the extra write-offs available to homeowners:
1. Mortgage Interest
For most, the biggest tax break from owning a home comes from deducting mortgage interest. Homeowners can deduct mortgage interest on up to two homes, a primary residence and a second home. Not only can you deduct the interest paid on your mortgage, if you have invested in mortgage points, they can be deducted too. Look out for Form 1098 or Mortgage Interest Statement from your lender.
2. Real Estate Taxes
If you itemize your tax returns, you can deduct property taxes you pay on your main residence and any other real estate you own. Beginning in 2018, the total amount of state and local taxes, including property taxes, is limited to $10,000 per tax year.
3. Home Office
Home Office. If you work from home and have a designated room or space where you work regularly and utilize for business only, you may be able to claim a home office deduction. And to make it easy, if your space is under 300 square feet, the IRS has come up with a simple method to calculate your deduction: $5 per square foot, up to $1,500.
4. Energy Efficient Improvements
For the past few years, tax payers have been able to deduct up to 10% of energy efficient improvements that meet Energy Star standards. This includes windows, entry and garage doors, solar panels, et cetera. Not only will you get a tax break, but you’ll save on energy bills!
It’s time to break free from the rental trap and let Uncle Sam ease the costs of your mortgage! Adding your tax refund to your down payment will give you peace of mind knowing that you’re investing that money into an asset that will build equity, appreciate in value and pay you back year after year. Ready to start the journey to homeownership? Talk to a Personal Loan Consultant today.