Rent is now rising faster than any other time in the past six years, making home ownership the better deal. Owning a home was found to be 44% cheaper than renting, according to the latest study from Trulia that compared the cost of the two.
Home ownership comes with some impressive tax benefits. Depending on your situation, there may be thousands of dollars coming back you way. For renters, those benefits are off the table. If you are on the fence about buying a home, here are some tax advantages that might just tip the scales and put your dream home within reach.
Lets imagine you bought a home back in 2010 for $250,000 but got a job offer across the country, and now it is time to make a move. Maybe you have done some home improvements, and the market has improved. Now, a Realtor thinks you can reasonably list your home for $300,000. You follow their advice and you receive and accept an offer for the listing price. Basically you just put a great profit in your pocket. Those capital gains are entirely free from federal income tax, up to $250,000 for individuals and $500,000 for joint filers.
Everyone knows that being a home owner means paying taxes on your property to local government. Whether that is the city or county, these taxes are entirely deductible from your federal income tax.
There also are incentives for greening a home, depreciation allowances for rental space or a home office, and more.
Also, mortgage interest deduction lets home owners deduct the interest on home mortgage loan valued at $1 million or less. Here is an example: Lets say you have a $250,000, 30-year, fixed-rate mortgage with a 4.5% interest rate. You will pay roughly $11,000 in interest in the first year. Assuming you are in the 25% income tax bracket, deducting that interest will save about $2,750 in taxes.
Tax benefits reflect people's belief that home ownership builds and strengthens families, neighborhoods and communities.
Looking to buy a home? What questions do you have about potential tax breaks? Let us know below!
Yanira Hernandez is the Broker in Charge & Realtor at Blue Endeavours Real Estate.
To contact Yanira, email her at email@example.com or visit the Blue Endeavours Facebook page: www.facebook.com/pages/category/Real-Estate/Blue-Endeavours-RE-619164098262243/
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