If you are interested in buying a home, you need to know how much you can afford. It’s vital to consider the tax advantages that come with ownership. Below are seven tax breaks that homeowners enjoy.
1. Mortgage Interest Deduction
You can deduct mortgage interest and late charges. If you have private mortgage insurance, you can deduct the premiums as well.
2. Home Loan Fees
You can deduct interest, including points, origination fees, and loan discount fees.
3. Property Tax Deductions
You can deduct real estate taxes paid at your closing and future property taxes.
4. Home Office Expenses
If you have a dedicated space in your home you use as an office, you can take advantage of a standard deduction up to $1,500. However, these deductions are highly scrutinized, so be careful.
5. Home Selling Costs
It is possible to deduct your selling costs. These include commission, title insurance, inspection costs, legal fees, and similar expenses. If you perform repairs or decorate within 90 days of selling, you may be able to deduct those costs as well.
If you resided in your home for two years before selling, you may be able to take a tax-free profit. However, this does not apply to second homes or rental properties. Also, you can subtract any money spent on improvements, including new windows, siding, or kitchen necessities. Routine maintenance does not apply.
7. Green Energy
If you added solar panels or other green technology to you home that cuts electrical costs, you may be eligible for residential energy tax credits.