Advantages of Home Ownership | League City | 77573

    Real estateThere are so many advantages to purchasing your own home.  For instance, it offers the pride of ownership, provides an overall sense of accomplishment, and is a place where you and your family will build many lasting memories.  Among others, real estate opens the door to many tax benefits as well.  Let’s discover some of the following ways that owning a home/s can help to create a tax shelter.

    Mortgage Interest & Points: If mortgage debt is $1,000,000 or less, married couples filing jointly can deduct the full amount of their interest.  Otherwise, those filing separately can write off up to $500,000 worth.  This also includes second homes or adjacent land to your main residence.  Points on either a home purchase or refinance can also be deducted, but these must be amortized for the latter.

    strong>Property Tax Deductions:All state and local taxes regardless of how many properties you own can be deducted, up to the alternative minimum tax required by law.  Funds that are held in escrow accounts can only be written off once the taxes are paid.

    Private Mortgage Insurance (PMI): A portion of PMI can also be deducted if household income is less than $109,000 per year or $54,500 for those filing separately.

    Interest On Home Equity Loans: As long as you have the necessary equity in your home to secure the required debt, you can write off the interest on a loan of up to $100,000 for those who are married filing jointly, or $50,000 when submitted separately.

    Working From Home: That’s right!  Even those who use a portion of their home for work purposes are able to deduct a percentage of the home’s depreciation, utility/maintenance costs and insurance.  This is one you definitely want to review with your tax professional to make sure you are getting the maximum available to you.

    Home Maintenance Interest: This is a tricky one, as you can write off the interest on any capital improvements made to your home, which will increase value and/or prolong the life of your home.  This includes certain types of restorations or additions made to the home with no cap on the investment.  However, you will not be able to deduct minor patching or cosmetics made to the home.

    Capital Gains/Selling Costs: As long as you have lived in your primary residence for at least 2 of the last 5 years, you are permitted to sell your property for up to $500,000 of profit for married couples filing jointly, or $250,000 for singles with absolutely no tax penalties.  However, if you end up selling for an amount above either threshold, you can subtract the amount of closing/selling costs that you incurred from your total gain.  Those who fall outside of the 2 out of 5 year limitation may be granted an exception given certain unique circumstances such as health problems, relocating for work or other such occurrences.

    Therefore, it pays to consider the benefits of homeownership and to discuss with your tax professional what you may qualify for.  Especially for those who are entertaining the thought of buying instead of renting, it is very important to consider the long-term impact that owning real estate can have on your overall financial future.  There are advantages whether you are buying for yourself or investing in properties for additional income.  Contact us today using our information above to start exploring what options may be available for you!

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