Tax Benefits of Homeownership
The current tax code provides a number of benefits to people who own their own home.
Here are a few of the benefits-
Mortgage Interest Deduction
If you plan to itemize your deduction, you can reduce your taxable income by deducting the interest that you pay on your mortgage. If you purchased your home before December 14, 2017, you can deduct interest paid up to $1 million of your mortgage debt. If you purchased your home after that date, you can deduct interest paid on up to $750,000 of your mortgage debt. You may also be able to deduct the “points” that you paid your lender to reduce your interest rate.
Interest Paid on Home Equity Debt
According to the IRS, you can deduct the interest you paid on your home equity line of credit from your taxable income, as long as the money is used to “buy, build or substantially improve the taxpayer’s home that secures the loan.”
Property Tax Deduction
Homeowners who itemize can also reduce their taxable income by deducting the property taxes that they pay on their homes.
Profits from Selling your Home
Generally speaking, taxpayers are required to pay taxes on any capital gains that come from the sale of assets. However, homeowners may exclude up to $250,000 ($500,000 if filing jointly) of taxable income from the sale of their home, as long as the home was a principal residence for at least two of the past five years that they owned the home. They must also have not excluded capital gains from their taxable income from the sale of another home in the past two years.
Tax credits for making your home energy efficient
You might be eligible for certain tax credits if you make improvements toward the energy efficiency of your home. To see what kind of incentives your state offers, visit energy.gov .
Work from home?
You might be able to deduct expenses from your home office if you use part of your home exclusively as your principal place of work.
Mortgage Credit Certificate
Some loan programs through state agencies, such as the Virginia Housing Development Authority, off a mortgage credit certificate, which offers a credit on your Federal tax bill each year.
The information contained herein (including but not limited to any description of TowneBank Mortgage, its affiliates and its lending programs and products, eligibility criteria, interest rates, fees, and all other loan terms) is subject to change without notice. This is not a commitment to lend.
*TowneBank Mortgage is not a tax consultant. Contact your tax advisor for more details.
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