What Are The Tax Benefits of Owning A Home

1. Top 8 Tax Benefits of Owning A Home https://www.nyrentownsell.com/

2. Tax Benefits of Owning A Home Owning a home comes with certain tax benefits as you enjoy certain tax deductions associated with property tax, mortgage interest as well as several other tax reliefs. The homeowners leveraging tax benefits could save a great amount of money paid annually to their lenders and government. Facebook Twitter LinkedIn

3. Tax Benefits of Owning A Home Mortgage Interest Deduction 01 Property Tax Deduction 02 MortgagePoints Deduction 03 Home Office Deduction 04

4. Tax Benefits of Owning A Home 05 Standard Deduction 06 Energy Efficiency Upgrades Deductions Ageing in Place Deductions 07 Tax Benefits on Selling Your Home 08

5. 1. Mortgage Interest Deduction If you are a homeowner with a mortgage not greater than $750,000, you can have your interest deducted on the loan. This is one of the key advantages of owning a home. You can get a huge deduction at tax time. The Tax Cuts and Jobs Act (TCJA) has provided this much-needed tax relief to the homeowners. Prior to TCJA, the deduction used to be $1 million. Homeowners also could deduct interest applicable on up to $100,000 of home equity debt, no matter how they used their borrowed money.

6. 2. Property Tax Deduction Homeowners can also have their property tax deducted up to $10,000. However, taxes imposed on commercial or rental properties—and property not owned by you can’t be deducted. There are many ways to claim your property tax deduction. If you use an escrow account with your lender to pay taxes, you can see the amount you paid in taxes on your IRS Form 1098—so you can get that deduction directly to your taxes. If you submit your taxes directly to your municipality, make sure you have a record of the paid taxes.

7. 3. Mortgage Points Deduction Another great tax benefit for a homeowner is the ability to deduct mortgage points being paid at closing when they bought the house. One mortgage point, also known as a discount point, is equivalent to 1% of your borrowed money (loan). Simply put, the points will be deducted over your loan period rather than in the year you paid them. For example, if you paid $ 250,000 for your home, each point costs you 1% of your home, or $2,500. You will get a deduction as you pay off your loan over time. The Internal Revenue Service has introduced some tests you need to pass to get fully deducted mortgage points you paid them. Therefore, visit the IRS website for getting the entire list of those tests.

8. 4. Home Office Deduction If you run a home business or work from your residence, you can be eligible for the home office deduction that is meant for both renters and homeowners. This tax relief requires you to use some portion of your home for business purposes and show that your property is a major location of your business. There are two ways to opt for the deduction—the regular method that involves determining the percentage of your property used for commercial operations, or the simplified method, which lets you deduct $5 per square foot, up to 300 square feet, for the commercial use of your property.

9. 5. Standard Deduction As you look for the available tax deductions while buying a property, it is downright essential to consider the standard deduction by the IRS.If you opt for the standard deduction, it will be deemed as your consent to get a set amount of money deducted from your taxable income. However, it won’t allow you to itemize your deductions. Some standard deduction amounts for each taxpayer are… $12,000 for Single$12,000 for Married Couples Filing Individually $18,000 for Household Head $24,000 for Joint Filing by Married Couples If the deductions you are eligible for as a homeowner are likely to be higher than the standard deduction amount, make sure to itemize your deductions.

10. 6. Tax Benefits for Energy Efficiency Upgrades Tax deductions are also applied to energy-efficient devices, such as solar panels, wind turbines, and other upgrades. This is known as the residential energy-efficient property credit. The residential energy credit makes up 22%-30% of the cost of the improvement, depending on what year the energy upgrades were installed.

11. 7. “Ageing in Place” Deductions Aging in place means that you will be residing in your own home for the later time of your life; not shifting to assisted living or senior retirement community. Seniors require several things to support their living conditions. You can claim for deductions for the installation of wheelchair ramps or grip bars in your home. You are also eligible to get deductions on cabinets or special equipment to support your aging.

12. 8. Tax Benefits on Selling Your Home This benefit is even bigger as most people are likely to sell their home at some point. If you’ve resided in your house for two out of five years before the sale, you can enjoy tax deductions on any profit you make for up to $500,000 if you’re married and up to $250,000 if you are single.For example, you’re single and you buy a home for $3, 00,000 and live in the home for 5 years. Over the time you invested $ 10,000 in renovations—accounting to your total investment of $3,10,000.

13. Understanding the tax deductions of owning a home can help you save thousands of dollars in tax. However, it is important to work with a tax consultant if somehow things are not clear to you. You can read the detailed article here. Thank you https://www.nyrentownsell.com/