The Tax Benefits And Deductions Available To Homeowners
March 7, 2014
There are many tax breaks for home owners. You can receive a tax deduction on your mortgage interest. Monthly interest payments exceed your principle loan payments tremendously. Because of that, you definitely want to get back as much as you can. You can also receive an interest tax deductions on a 2nd mortgage as well. Interest paid on a refinance, and home equity loans are also tax deductible.
Discount points are often tax deductible. Discount points are a one time fee paid at the closing of your home. Most of the time it is 1% of your total loan amount. It is considered "pre-paid interest." Therefore, it reduces the interest on the loan. To make it simple, this upfront interest payment decreases your monthly mortgage payments.
Real Estate taxes can often be deducted. Property taxes can be deducted in the same year they are paid. If your taxes are escrowed with your lender, they will send you an annual statement for you to file.
Certain types of home improvements are tax deductible. That is mainly for medical reasons or for a chronically ill person. Home improvements for cosmetic enhancements are not tax deductible.
For people who work from home, home offices are tax deductible. You can deduct from the expenses of running a home office. That includes telephone lines, electricity, internet, heating and air.
I just went over a generalization of home owner’s tax benefits. As always, everyone has a different situation. You should always consult with an accountant or CPA to get a more customized view of what is available to you.
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