Friday, April 1, 2016

Tax Deductions & Credit for Homeownership

Content provided by Loan Officer, Jay Collins with Southeast Mortgage 678-488-1336. For mortgage info & questions, see Jay's contact info below. For tax questions, contact a tax professional. My tax professional is Jeffrey White of Pro Tax Service 770-979-7157.       
Tax Deductions & Credit for Homeownership
Lucrative Tax Breaks That Await...
Purchasing a home is typically the biggest investment many people will ever make and part of the reason is because of the significant tax advantages available to homeowners. With tax season upon us, now is a perfect time to take advantage of the resounding tax benefits that can potentially reduce the cost of purchasing and owning a home, and prove financially beneficial when they decide to sell. For buyers who purchased last year who are now proud property owners, here are a list of the many home-related tax breaks that await them?

Whether you are in the process of filing taxes or need one more reason to visit with a Realtor like myself, here's a list of the most common and favored tax benefits associated with homeownership – many of which come in the form of tax deductions:

Tax Deductions:
  • Property taxes, state and local
  • Mortgage interest on a primary home as well as on a second home, boat or RV – as long as it has cooking, sleeping and bathroom facilities," according to Bank Rate. For most homeowners, a large portion of their monthly mortgage payment goes toward a deductible interest, making this one of homeowner's most lucrative tax breaks.
  • If you sold your home and made a sales gain. If you lived in a recently sold home for at least two of the last five years before the sale, you can avoid paying tax on the sales gain from the sale of the residence – up to $250,000 if you're filing single and $500,000 if you're filing jointly. If you don't meet the resident requirements, you will owe tax on the profit unless you can prove that you were forced to sell before you could live in the property for two years due to unforeseen circumstances such as death, job loss, divorce or multiple births from a single pregnancy.
  • The interest borrowed for a home equity loan, up for $100,000.
Tax Credits:
  • According to Fox, millions of people every year claim a home office deduction, meaning they regularly and exclusively dedicate a portion of their home to meet with clients or conduct work. The deduction is $5 per-square-foot of space up to 300 square feet.
  • Home improvements that were required for medical care
  • Energy efficient home improvements for new and existing homes. Possible energy efficient upgrades that qualify for tax credits include geothermal heat pumps, small residential wind turbines, solar energy systems and fuel cells. Depending on the improvement, the tax credit can be 10-30 percent of the cost. Federal tax credits in regard to energy efficient improvements expire every year until Congress approves a new set of standards, so these same tax credits may not apply next year. Visit Energy Star's website to learn more.
What can't homeowners write off? According to Turbo Tax, homeowners cannot deduct the insurance on their home, appraisal fees, homeowners association dues or general home improvements.
The financial benefits of owning a home are plentiful, including the resounding advantage of building equity over time and offering far greater long-term benefits over renting. However, at tax time, the financial benefits become even more apparent with homeowners given substantial tax breaks from the time they purchase a home until the time they decide to sell. *REMEMBER - Speak with a professional tax consultant before submitting taxes to ensure legal and financial accuracy.


Looking to SELL or BUY a home? 
Let's chat and see if we'll be a good fit for each other!

Natasha Bazile is a Realtor & Home Stager. She prides herself in being a guide to her clients and finds fulfillment in helping them achieve their goals.

Direct Phone: (404) 857-2508 Email - Facebook - Twitter - YouTube

No comments:

Post a Comment