As you embark on the adventure that comes with buying a home, it can be an exciting time. Many people feel they have finally arrived the day they first become homeowners. This can be a big life altering decision that is exciting and overwhelming at the same time. There are several benefits that come from owning a home. One of them is that it can help you out when tax season rolls around. Mark Dicus & Company is here to discuss what buying a home changes for your taxes every year.
Tax Deductions You Can Claim When You Own a House
Because our federal government has always tried to encourage people to purchase homes, there are many tax deductions you can benefit from when you buy a home. Following are some of the deductions you should start to familiarize yourself with if you just purchased your first home.
– Mortgage Interest: This is the biggest tax deduction you will see when you purchase your home. During the first years of paying back your mortgage, you will be paying almost all of your payment to interest. This means that you have a large sum of money that you can claim as a deduction on your taxes each year. The home has to be your principal residence and you have to itemize your taxes to take advantage of this.
– Mortgage Points: Some buyers are able to “buy down their rate” buy paying to secure a lower interest rate. You can deduct the full amount of these points from your taxes.
– Mortgage Insurance: If you put less than 20% of the cost of the home down as a down payment, you will be required to pay mortgage insurance each month to help the lender minimize the risk of financing your home. The money you spend on mortgage insurance can be lumped into your mortgage interest and claimed on your taxes.
– Property Tax: You can claim some of your property taxes each year. It is important that you remember the word “some.” There is a $10,000 limit on property taxes that can be claimed each year on tax returns. If you paid more than that, you can’t claim that money if you bought your home after 2018. Your escrow payment is usually a combination of homeowner’s insurance and property taxes each month. It is important to remember that you can’t claim homeowner’s insurance and can only claim the property tax portion of that payment.
Tax Preparation, Filing, Resolution & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
So, if you were thinking about purchasing a home and were wondering if it would help you out at tax season, the answer is yes, absolutely. You can see big tax benefits when you own your home. If you are having a hard time understanding what you can and can’t claim on your taxes, call on the professionals at Mark Dicus & Company to help you sort it all out. Call us today!