Five Tax Benefits Of Homeownership

Tax Benefits of Owning a Home

The Tax Benefits of Owning a Home

There are a lot of benefits to homeownership. Having a place to call you own, building equity and having an automatic savings plan are just a few of those benefits. But in addition to the direct benefits homeownership offers buyers, it also has some tax benefits. Let’s take a look a few of the tax benefits of homeownership:

 

1.    Homeowners can deduct all of their mortgage interest of up to $1 million on their tax return. That means that instead of paying the tax man thousands of dollars in taxes, you can invest that money into your home, eventually paying down your mortgage and building equity.  This rule not only applies to the homeowner’s primary residence but to second homes, rental homes, investment properties, vacation homes and any other real estate property the taxpayer owns as long as they spend either 14 days each year in the property, or 10 percent as much time as it’s rented.

 

2.    Homeowners with home equity loans can deduct from their taxes up to $100,000 in mortgage interest as long as the loan does not amount to more than the value of the home.  Homeowners holding home equity loans on underwater properties may be able to deduct some, but not all of their interest on their taxes.

 

3.    If a homeowner sells their primary residence, they can keep up to $250,000 ($500,000 for married couples) of the profits tax-free. The homeowner can also sell an adjacent parcel and keep the profits tax-free as long as the parcel was not used for business.

 

4.    Homeowners may deduct the amount they pay in property taxes on any property they own (even if they don’t live in it) from their income taxes.

 

5.    If a homeowner buys a home that’s at least 50 miles closer to their job than their old home they may be able to deduct those moving expenses. For the self-employed, any move 50 miles or more will allow moving expenses to be deducted from income taxes.

 

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