As a Realtor I need to be careful in providing detailed tax information to my clients for obvious reasons. still, most of us know that renting offers no breaks while purchasing a home offers tax benefits that can make ownership more affordable.
Following are a few of the tax benefits to home ownership.
▪ Deductible home buying expenses:
Some closing costs in a home purchase are deductible, such as loan origination fees and prorated interest on a new loan. Also prorated property taxes paid at settlement are a deduction that is currently allowed.
▪ Home mortgage interest deduction:
As a Home owner you can take an itemized deduction on interest paid on a mortgage of up to $1 million for a principal residence. This deduction could potentially reduce the cost of borrowing by 30%.
▪ Property tax deduction:
Home owners can deduct from their federal income taxes the state and local property taxes that are paid on a home.
▪ 14 days of free rental income:
Home owners can rent their home up to 14 days during the year and pay no income tax on the rental fee.
▪ $250,000/$500,000 sale exclusion:
Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on profit if under the following guidelines, $250,000 for a single home owner and $500,000 for married homeowners who file jointly.
All The Best,
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