Save on Taxes With Home Ownership

Purchasing a home is a big investment and typically requires monthly mortgage payments beyond the downpayment. However, there are ways to make that investment pay off when it comes time to pay your taxes. Even with the recent changes in the taxes, there are various ways your homes in Grand Forks can save you money through tax breaks and credits. It may be worth talking to a tax advisor or at least reading through IRS Publication 530, “Tax Information for Homeowners”, to see how these tax benefits can work for you.

Real estate taxes that are assessed uniformly, such as property tax, can typically be deducted. That includes property taxes associated with a new home purchase. Under the new tax bill, starting in 2018, all property tax, sales tax, and state and local tax deductions are capped at $10,000.

Mortgage interest is one of the biggest areas where you can see significant deductions come tax time. If you purchased your home before December 15, 2017, you can deduct interest payments up to $1 million in collective debt if you’re filing jointly as a married couple, or up to $500,000 if you’re a married couple filing separately or a single filer. However, if you purchased your home on or after December 15, 2017, interest deduction payments are applied only up to $750,000 in mortgage debt, though it applies to both primary and secondary residences.

If you paid points at closing to lower your mortgage interest rate, those points are deductible. Typically, the deductions must be amortized over the life of the mortgage.

Finally, even though homeowners often take mortgage interest as a deduction, there are some ways it can be claimed as a credit instead. If you have a qualifying low income and receive a Mortgage Credit Certificate from a suitable state or local agency, you should file a Form 8396 as part of your tax filing to claim a credit that is applied directly to your tax bill instead of from your taxable income amount that is used to determine your tax bill.

With the various changes to the tax bill, it may be worth it to read the relevant IRS publications carefully or turn to a qualified tax preparer to see how you can get the most financial benefits out of your homes in Grand Forks. There are ways that your home can help save you money on your taxes and it’s worthwhile to know all of your options.

Categorised in: New Home Tips, Things To Do

This post was written by Crary Real Estate