What Are The Tax Benefits of Owning A Home

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Top 8 Tax Benefits of Owning A Home
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• Tax Benefits of Owning A Home

Owning a home comes with certain tax benefits as
you enjoy certain tax deductions associated with
property tax, mortgage interest as well as
several other tax reliefs. The homeowners
leveraging tax benefits could save a great amount
of money paid annually to their lenders and
government.
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Tax Benefits of Owning A Home
01
Mortgage Interest Deduction
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Property Tax Deduction
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Mortgage Points Deduction
04
Home Office Deduction
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Tax Benefits of Owning A Home
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Standard Deduction
06
Energy Efficiency Upgrades Deductions
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Ageing in Place Deductions
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Tax Benefits on Selling Your Home
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• 1. Mortgage Interest Deduction

If you are a homeowner with a mortgage not
greater than 750,000, you can have your
interest deducted on the loan. This is
one of the key advantages of owning a home.
You can get a huge deduction at tax time. The
Tax Cuts and Jobs Act (TCJA) has provided this
much-needed tax relief to the homeowners. Prior
to TCJA, the deduction used to be 1 million.
Homeowners also could deduct interest applicable
on up to 100,000 of home equity debt,
no matter how they used their borrowed
money.
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• 2. Property Tax Deduction

Homeowners can also have their property tax
deducted up to 10,000. However, taxes imposed
on commercial or rental propertiesand property
not owned by you cant be deducted. There are
many ways to claim your property tax
deduction. If you use an escrow account with
your lender to pay taxes, you can see the amount
you paid in taxes on your IRS Form 1098so you
can get that deduction directly to your
taxes. If you submit your taxes directly to your
municipality, make sure you have a record of the
paid taxes.
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3. Mortgage Points Deduction

• Another great tax benefit for a homeowner is the
  ability to deduct mortgage points being paid at
  closing when they bought the house.
• One mortgage point, also known as a discount
  point, is equivalent to 1 of your borrowed
  money (loan).
• Simply put, the points will be deducted over
  your loan period rather than in the year you
  paid them. For example, if you paid 250,000
  for your home, each point costs you 1 of your
  home, or 2,500. You will get a deduction as you
  pay off your loan over time.
• The Internal Revenue Service has introduced some
  tests you need to pass to get fully deducted
  mortgage points you paid them. Therefore, visit
  the IRS website for getting the entire list of
  those tests.

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• 4. Home Office Deduction

If you run a home business or work from your
residence, you can be eligible for the home
office deduction that is meant for both renters
and homeowners. This tax relief requires you to
use some portion of your home for business
purposes and show that your property is a major
location of your business. There are two ways
to opt for the deductionthe regular method that
involves determining the percentage of your
property used for commercial operations, or the
simplified method, which lets you deduct 5 per
square foot, up to 300 square feet, for the
commercial use of your property.
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• 5. Standard Deduction

As you look for the available tax deductions
while buying a property, it is downright
essential to consider the standard deduction by
the IRS.If you opt for the standard deduction,
it will be deemed as your consent to get a set
amount of money deducted from your taxable
income. However, it wont allow you to
itemize your deductions.
Some standard deduction amounts for each taxpayer
are
12,000 for Single12,000 for Married Couples
Filing Individually
18,000 for Household Head
24,000 for Joint Filing by Married Couples
If the deductions you are eligible for as a
homeowner are likely to be higher than the
standard deduction amount, make sure to itemize
your deductions.
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6. Tax Benefits for Energy Efficiency Upgrades
Tax deductions are also applied to
energy-efficient devices, such as solar panels,
wind turbines, and other upgrades. This is known
as the residential energy-efficient property
credit. The residential energy credit makes up
22-30 of the cost of the improvement, depending
on what year the energy upgrades were installed.
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7. Ageing in Place Deductions
Aging in place means that you will be residing
in your own home for the later time of your life
not shifting to assisted living or senior
retirement community. Seniors require several
things to support their living conditions. You
can claim for deductions for the installation of
wheelchair ramps or grip bars in your home. You
are also eligible to get deductions on cabinets
or special equipment to support your aging.
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8. Tax Benefits on Selling Your Home
This benefit is even bigger as most people are
likely to sell their home at some point. If
youve resided in your house for two out of
five years before the sale, you can enjoy tax
deductions on any profit you make for up to
500,000 if youre married and up to 250,000
if you are single.For example, youre single
and you buy a home for 3, 00,000 and live in the
home for 5 years. Over the time you invested
10,000 in renovationsaccounting to
your total investment of
3,10,000.
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Understanding the tax deductions of owning a
home can help you save thousands of dollars in
tax. However, it is important to work with a
tax consultant if somehow things are not clear to
you. You can read the detailed article here.
Thank you
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