Homeownership is good for you. It helps you put down roots in a community, provides a sense of stability, is an excellent investment, and can even help you save on your taxes. Let’s explore how owning a home can mean more cash in your pocket at tax time.
Mortgage interest payments are generally tax-deductible on home loans up to $750,000.* This applies to first mortgages, second mortgages, and home equity loans and lines of credit, as long as the funds were used to buy, build, or substantially improve your home.
Mortgage discount points may be deductible under certain circumstances. A point costs 1% of your loan amount, and purchasing points at closing will lower your interest rate.
Property taxes paid to state and local government entities are deductible up to $10,000.
Capital gains taxes, where you pay tax on the amount of money you make when you sell an asset, may be waived up to $250,000 (or $500,000 if married filing jointly). For example, if you purchase your home for $300,000 and sell it for $575,000, you may only need to pay taxes on $25,000 of the profit, rather than the full $275,000.
Taxes Are Due Wednesday, April 15
The filing date for taxes appears to be firm this year, so remember to file by the deadline.
*For mortgages taken out after December 15, 2017.
Note that exceptions, limitations, and restrictions may apply to any of these scenarios. We are not tax preparers or advisors, nor financial consultants. Consult your tax advisor or financial advisor for more information.