Many Americans got some depressing news last week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home.
According to theTax Policy Center’sBriefing Book-“A citizen's guide to the fascinating (though often complex) elements of the federal Tax System”- there are several tax advantages to homeownership.
Here are four items, and a quote on each, from theBriefing Book:
1. Mortgage Interest Deduction
“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”
2. Property Tax Deduction
“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”
3. Imputed Rent
“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”
4. Profits from Home Sales
“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”
We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.
Disclaimer:Always check with your accountant to find out what tax advantages apply to you in your area.
Author:Tiffany Miller Phone: 602-803-1642 Dated: April 26th 2017 Views: 177 About Tiffany: ...
The Bole Group of Remax Preferred Choice, is a team of real estate agents with a strong motivation to deliver to our clients an unforgettable & professional real estate experience unlike any other. Our goal is to create raving fans with every purchase or sale that keeps them coming back to us as their home ownership needs and goals change. This is achieved through a combination of structured systems and cutting edge real estate technology & strong faith, ethics, morals, and core values. We deliver a consistent & predictably pleasurable experience for both our clients and the team in each home sale.
* Systemized processes to deliver a predictable and successful real estate experience with every client
* Phoenix real estate market knowledge across the entire Valley
* Residential real estate family and real estate investment specialists
* Proven track record of selling homes for top dollar and industry leading success rate
The Bole Group serves the entire Phoenix real estate market, with a focus on West Valley real estate & West Valley homes for sale. Our Westgate office is perfect for those looking for Glendale, AZ homes for sale & our team leaders are Goodyear, AZ real estate agents & Goodyear residents as well.
The team is led by Christopher Bole and his wife, Bettina Riesgo, who is an Associate Broker. Remax Preferred Choice has offices located in Glendale, AZ at Westgate City Center just blocks from the Arizona Cardinals at University of Phoenix stadium, and in Goodyear, Arizona at Estrella Mountain Ranch.
Tax Return Depressing? Owning a Home Could Help Thursday April 20
"We were one of the many families who were struggling to get the bank to modify our home loan. After many months, the bank was not willing to work with us. Unfortunately we were left with no other choice but to short sale ourhome. We worked with a real estate agent and after a year the short sale was never approved.
Through many struggles with trying to get our home sold with the previous real estate agent we were getting nowhere. Just when we though hope was lost, and our home would go into foreclosure, Chris Bole with Remax had drop by and left his business card at our door. We gave Chris a call I decided we had nothing else to lose and gave him permission to assist us with our shorts out. Less than five months later our home was sold. We cannot describe how lucky we were to work with Chris Bole and Bettina.
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Not only did Chris and his team help us sell our home but helped us tremendously to find a rental we could live in until we are ready to purchase again. We highly recommend working with Chris as we would not hesitate to work with him again!