We all know there are so many benefits to being a homeowner, but did you know this one?! Owning a home may come with some pretty sweet tax advantages that can help ease the pain of tax season. As a refresher, here are seven of the most popular to ask your financial advisor about this tax season:
1. Mortgage interest deduction: Couples filing jointly may be able to deduct the interest they pay on up to $750,000 of mortgage debt ($375,000 if married filing separately).
2. Real estate taxes: You may be able to deduct state and local property taxes up to $10,000 per year ($5,000 if married filing separately).
3. Mortgage points: If you pay discount points when you take out your mortgage, you may be able to deduct those, too!
4. Tax-deductible mortgage insurance: The IRS counts private mortgage insurance, VA loan funding fees, USDA loan guarantee fees, and FHA loan up-front mortgage insurance premiums as tax-deductible. There is always a chance this deduction may expire, so check the tax rules before counting on these savings.
5. Medically necessary home improvements: You may be able to deduct medically necessary home improvements that help you, your spouse, or dependents who live with you. Examples include expanding doorways, installing ramps or lifts, lowering cabinets, and adding railings.
6. Moving expenses: Depending on your state, moving expenses may be tax-deductible if you’re a member of the armed forces and moving because of a change of station.
7. Capital gains: The capital gains tax exclusion says you may not have to pay taxes on the first $250,000 of profit from selling your home if you’re single or $500,000 if you’re married so long as you’ve lived in your home two of the last five years.
Owning a home comes with many benefits, including some significant tax advantages. However, it is important to note that tax laws are constantly changing and can vary by state, so if you're a homeowner, we strongly recommend consulting with a financial advisor or tax professional to understand how these benefits may apply to your personal situation.
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This post is for informational purposes only and should not be considered financial advice. Figures given are estimates and are not guaranteed.