Being a homeowner requires responsibility. Owning a home comes with yard work, repairs, insurance and, of course, figuring out your taxes. With tax season in full swing now is a good time to review what tax benefits are available to homeowners.
If you’re not already aware, a Realtor can tell you about the significant savings that come with owning a home. Especially now when many families are struggling financially and the economy still is recovering, the tax benefits that come along with being a homeowner are a welcome relief to many. Owning a home is one of the best ways to build financial security over the long term, providing both equity accumulation and tax benefits over time.
One of the most notable tax benefits associated with homeownership is the mortgage interest deduction (MID). The MID allows homeowners to deduct the interest paid on a mortgage debt of up to $1 million on a primary residence and one additional residence.
The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For people who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their future through homeownership.
Another tax benefit allows sellers to exclude certain capital gains from the sale of a principle residence. Couples who file a joint federal return can exclude from taxation up to $500,000 of any gain in their home’s value. Singles can exclude gains of up to $250,000.