Did you know that there are several benefits of being a homeowner? Check out the following points:
TAX INCENTIVES FOR HOMEOWNERS
- The interest you pay on your mortgage is tax-deductible, up to $1 million. This deduction applies to any kind of home, including a second home under certain conditions.
- As a homeowner, you can deduct the local property taxes you pay each year, too. This applies to both your principal home and any others you may own.
- If you (or even the seller) paid points to the lender to secure your mortgage, you may be able to deduct those points on your taxes.
- If you purchase a home in 2009 (and have not owned a property in at least three years) you can take advantage of the new homebuyer tax credit. It does not require repayment if you hold on to your property for at least three years! That is an incentive of up to $8,000!
- Mortgage Insurance Premiums - Thanks to Congress, MI premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
- New Standard Deduction - Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying tax payers who don’t itemize but pay property tax, get up to a $500 extra deduction; married filing jointly get up to $1,000.
There are some special incentives as well:
- Tax-Free Profits on Sale - When you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, twice that if you’re married, and not owe any capital gains taxes.
Other Benefits - Ask your tax professional about Penalty-free IRA payouts for first-time buyers, home improvement deductions, energy credits, and even moving expense deductions.