Four Tax Advantages of Owning a Home

Four Tax Advantages of Owning a Home

There are many advantages to owning your own home. But did you know you owning your own home also provides you with several tax benefits as well?

With tax season fast approaching, people are looking for ways to save on their taxes and put more money back in their pockets. Owning your own home offers several tax advantages and benefits and with today’s low mortgage rates, you can put even more money back in your pocket by purchasing a home this year. Here are for tax advantages of owning a home so you can remember them when you are filling out your tax forms for this year.

Mortgage Interest
Did you know you can deduct the interest on your mortgage from your taxes? It’s true! This is one of the biggest tax advantages of owning your own home. The rule states that up to a million dollars of mortgage interest is tax deductible as long as you spend some time in that home. So that means you can even deduct the mortgage interest from your vacation home as long as you spend a couple weeks there each year.

Most homeowners already know about that tax advantage to owning a home. But you might not have known this next one: The IRS allows you to deduct the interest of any debt that uses your house to secure the loan. The debt can be no more than $100,000 however. This applies mainly to home equity loans.

Selling Your Home
When you own your own home and you decide to sell it, you probably do not have to pay taxes on the profits you make from the sale of your home unless you make at least a $250,000 profit for individuals or $500,000 for couples who file jointly. This guideline also covers any land that is adjacent to your home unless you are using it for business.

This guideline also applies only to your main residence. You have to live at the home for two out of the previous five years in order to qualify for this tax advantage. Also, you can only claim this exemption once for every two tax years.

Moving Expenses
When you buy a new home that is 50 miles or more closer to your new job, you can deduct those moving expenses from your taxes for that year. However, in order to qualify for this tax advantage, you must work in the area of your new job for at least 39 weeks during the next year and you must also be employed there full time. If you are self-employed, however, you can deduct your moving expenses when you move to a new home.


Property Taxes
Did you know your property taxes are an income tax deduction? You can write off the property taxes for all the homes you own regardless if you live in them or not.

Tax deductions depend on a number of factors. It is always best to seek the guidance and expertise of a qualified accountant or tax professional when claiming a bunch of tax deductions. Look for one in your local area. The frustration they save you is definitely worth the money!

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Comments

  • Sol

    December 29, 2011

    You should check with an accountant but because you paid cash you will not receive the mortgage interest deduction, which is usually the biggest tax-break when buying a home. That's the big disadvantage of paying cash. There is talk about eliminating this deduction to help balance the budget but it's a long way from happening.

    The article lists some other deductions you might quality for.

  • Mr,Berry

    December 29, 2011

    I am a frist time home owner I paid cash for my house
    in the sum of $87000. What kind of tax breaks can i expect,

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