Homeownership is more than the American Dream, it has very real, and very countable, tax benefits as well. With the cost of a home at the forefront of many potential buyer’s minds, these tax deductions are just one facet of the financial benefits that buying a home represents. When weighing the pro’s and cons of buying a home versus re-upping your lease or renting for the first time, be sure that the following points are listed on the “pro’s” list for home ownership.
With mortgage rates on a slow uptick and a stable housing market with lighter-than-usual inventory that is increasing the competition potential, knowing the facts can be the difference between acting and not. Read on to learn the top four tax-positive reasons to buy a home this year.
Mortgage Tax Deductions
When you sign for a mortgage loan, mortgage interest is part and parcel of the package. The tax code allows homeowners to deduct that mortgage interest that is charged during the respective year. This deduction can be a deciding factor between owing on April 15th and getting a refund, especially in the first half of the duration of your mortgage loan. This is because mortgage interest makes up a significant portion of the entirety of the mortgage payment during this time period.
The first year you buy your home, you are able to claim mortgage points (origination fees) that were paid at closing on your loan. No matter who pays the points, whether it be by the seller or you yourself, you can still claim them as a tax deduction. With points averaging around 1 percent or higher, the tax savings can be considerable.
Property tax is also tax deductible. Any real estate property taxes paid on your primary residence or vacation home is 100% deductible, and depending on the tax rates in your area, you could see a good bump to your tax savings.
So do the math. The tax benefits of owning a home, added to the viability of the real estate market in your area, related to the loss of money you are seeing by renting for a long period of time, and it’s easy to see that now is the time to buy a home.