There are many advantages associated with home ownership. The American Dream offers financial gain, stability and many social benefits. A real estate agent will tell you that one of the biggest perks associated with home ownership can be found when filing your taxes, and depending on your situation, there may be thousands of dollars coming back your way.
If you use a professional to prepare your taxes, he or she will know these tax benefits inside and out. But for the first-time homeowner, for people preparing their own taxes or for those who are new homeowners in New York State, Columbia-Greene Board of Realtors® has some tips for tax season.
The mortgage interest deduction. This may be the most notable and advantageous tax benefit that homeowners enjoy. The mortgage interest deduction allows homeowners to deduct the interest paid on a mortgage debt of up to $1 million on a primary residence and one additional residence. This deduction is especially helpful in the early years of a mortgage when the monthly payment goes largely toward interest.
Property taxes. It is widely known that being a homeowner means paying taxes on your property to local government, whether it is the city, county or state. What you might not know is that these taxes are entirely deductible from your federal income tax, which is more great tax news for homeowners.
Mortgage insurance premium deduction. Homeowners with incomes of up to $100,000 can deduct their mortgage insurance premiums if they were required to obtain insurance as a condition of receiving financing for the home. With the current obstacles that prospective homebuyers face—such as student loan debt—this deduction is a benefit that can save homeowners a great deal of money.
Home office deduction. If you run your business from your home, you can qualify for a deduction for the use of that portion of your home used for business purposes. However, there are strict rules about home office deductions, which can sometimes come under scrutiny.
New York State residents can take advantage of other tax benefits. New York homeowners qualify for exemption from school taxes through the STAR program, which is based on residency, income and age. Other property tax exemptions are available to veterans, senior citizens and persons with disabilities.
Home ownership is an investment in the future — it’s where we make memories and feel comfortable and secure; it strengthens communities and it offers financial security. Tax breaks are just one of many benefits of being a homeowner, and even those who have owned a home for years may be unaware of all the opportunities for savings.
If you are on the fence about buying a home, taking advantage of these tax benefits can help put your dream home within reach. By working with a Realtor® you can better understand the home-buying process and the many benefits that come with ownership.
In addition to helping you buy a home, your Realtor can often refer you to a tax specialist who can assist you with benefitting from all possible deductions and exemptions related to property ownership.
Ron Caplan is president of the Columbia-Greene Board of REALTORS®, columbiagreenerealtors.com.