TAX BENEFITS FOR BUYING, OWNING AND SELLING A HOME
Tax Breaks For Selling A Home
Another major benefit to homeownership is that tax law allows you to completely shelter at least a very large amount of the profit from taxes, if not all of it. If you lived in the house for at least two of the five years before the sale, then up to $250,000 of profit is tax free for a single filer, and $500,000 for a married couple filing jointly.
*This is for general informational purposes only and not meant to override or replace professional tax advice. See a licensed tax advisor for your specific circumstances.
Tax Breaks For Owning A Home
The following are some of the most common ongoing tax benefits that you have available to you regardless of how long you have owned your home.
Mortgage Interest –You can deduct the interest portion of your monthly mortgage payment made on any loan taken out against your home (up to $1 million). In the early years of a loan most of your monthly payment is interest, so this can really add up.
Mortgage Insurance – Beginning in 2007, you are now allowed to write off the mortgage insurance that is typically required if you made less than a 20% down payment on your home.
Property Taxes –You are allowed to write off the amount you pay for local property taxes.
Energy-Saving Home Improvements – Recent incentives have made it possible to save money on your taxes for specified improvements made to your home. Examples of these include improvements made toward energy-efficient skylights, outside doors, windows, high-efficiency furnaces, water heaters, central air units and solar-powered generators, to name a few.
The Home Office Deduction –You may be able to claim a deduction for certain home expenses if you use a portion of your home for business.
Other Itemized Deductions –Chances are good that once you own a home you’ll opt to itemize your deductions rather than take the standard deduction. This means you can save money by deducting many other non-housing-related write-offs that will be available to you, such as health-care, student loans, donations to charity and more.
One-Time Tax Breaks For The Year In Which You Buy
In the year that you purchase your home, you will have some unique one-time write-offs in addition to the ongoing ones listed in the next section.
Origination Fees and Discount Points –These costs to obtain a loan and reduce the interest rate are tax deductible for the buyer, even if it is the seller who actually pays for them.
Prepaid Interest –You will likely pay daily interest between the day of closing and the end of that month. This amount can be written off on your taxes.
Moving Costs – These can only be written off if you buy a home in order to take a new job that is a considerable distance from your prior home. There are some strict rules here so confer with a tax adviser if this may apply to you.
Click here to see why our innovative marketing system sells homes quicker and for more.
Click here to see why more buyers choose our team when making their purchase.