tax break


It’s tax season again….. a perfect time to review the financial benefits of owning a home.
Owning a home makes a lot of “cents” especially around tax time. Many home-related expenses are tax deductible and, believe it or not, you can even enjoy the tax benefits when you sell your home.
Homeowners can deduct the mortgage interest from their taxes. For many, this is a huge deduction since interest payments can be the largest part of your mortgage payment, especially in the early years.
1. Closing Costs: When you buy a new home, you have the ability to deduct the “points” or origination fees on your loan. Most origination fees are typically 1 % or higher, which results in considerable savings.

2. Property Taxes: Real estate property taxes on your primary residence and a vacation home are fully deductible.

3. PMI Insurance: For mortgages issued in 2007 or later, homeowners can deduct the PMI premiums. If your adjusted gross income increases above $50,000 on filing separately tax returns or $100,000 on all other returns, this deduction will begin to phase out.

4. Home Equity Lines of Credit: You can also deduct the interest paid on a home equity loan or line of credit. These interest rates are lower than high credit card rates so you can transfer your credit card debt to your home equity loan and not only save money but get a deduction as well.

5. Capital Gains: If you buy a home as your primary residence for more than two years, you qualify. When you decide to sell your home, you can keep profits for up to $250,000 if you are single or $500,000 if you are married and not owe any capital gains.

6. First Time Homebuyers: If you are a first time homebuyer and need to use the money in your traditional IRA as a down payment, you will not have to pay the normal 10% penalty. The maximum amount that can be withdrawn without a penalty is $10,000. It does not apply, however, to 401(K) plans.

7. Energy Credits: Some energy-saving home improvements to your primary residence can earn you a tax credit up to $500. A tax credit reduces your tax bill dollar-for-dollar.

8. Savings Plan: Each time you make a mortgage payment and reduce your principal you are building equity in your home – in essence, it is a savings plan in your investment.

9. Buying is Cheaper than Renting: In the short term, it may be less expensive to rent; however, long term buying a home is the way to go. Over time, the interest portion of your mortgage payment decreases and eventually will be less than paying rent – build equity in your future, not your landlords!