Tag: New Home Owners

Tax Benefits of Owning a Home

An image of pennies on a wooden backdrop to depict the tax benefits of owning a home.

If you own your home you might not be aware of some of the benefits that come along with it. Of course there is the increased satisfaction of home ownership. We know that we appreciate the benefits of owning our own space.  We can paint the walls the colors that we like.  Decorating choices are are our own. When we want to make improvements like new carpet or hardwood instead of carpet the choice is ours. There is also the benefit of appreciation that we get the benefit of when it is time to sell. But what are the tax benefits of owning vs. renting? This week we wanted to highlight the tax benefits of owning a home. Here are seven that you should remember come tax time!

Mortgage Interest Deduction

The number one benefit of owning is that you are able to deduct the mortgage interest at tax time. The more recent your mortgage the greater your tax savings.  This deduction is itemized.

Tax Benefits of Owning a Home: Property Taxes

Another benefit is that you are able to deduct your property taxes. Taxes are built in to most people’s monthly mortgage payment so you may not even know how much you are paying in taxes.  You will be receiving a statement at the end of the year that will tell you and this amount can be written off.

Mortgage Insurance

Did you know that your private mortgage insurance is also tax deductible?  It is!  If you were not able to put down 20% when you purchased your home you are paying PMI or private mortgage insurance. That amount can be tax deductible.

Tax Benefits of Owning a Home: Energy Efficiency

Have you made any energy efficient upgrades to your home?  You can receive a tax credit for solar electric and solar water-heating equipment.

Work From Home

Many of us have had to work from home at points during the last several years. If working from home is a requirement for your job you may be able to deduct for a home office.  That deduction can be as much as $5 per square foot up to 300 square feet or office space.  If you are a W-2 employee, sorry you can not use this deduction.

Tax Benefits of Owning a Home: Home Improvements

Many of us are trying to decide if we are better off buying a place that fits our needs long term, as we age or if we are best staying where we are and making changes so that our current home works for us.  Did you know that home improvements that are done to help you age in place may be tax deductible.  The total cost must exceed 7.5 % of your adjusted gross income.  You must also prove that the changes were medically necessary with a letter from your doctor.

Home Equity Line of Credit

Another deduction to consider is the interest on a home equity line of credit (HELOC). Interest is deductible only if used to buy, build or improve the property.

As a home owner these are the tax benefits of owning a home for you to think about now and remember when it is tax time.  Make sure that you are prepared so that you are not missing anything that can save you money! If you are a renter and would like to enjoy some of these deductions for yourself.  Contact us and let’s explore home ownership!

How Will an HOA Impact My New Home

HOA’s (Home Owners Associations) impact us all.  If you live in a neighborhood with one you are affected and if you are looking for a house to buy and the home you like is in an HOA you are affected.  What are the pros and cons of HOA’s?  Lets first cover some cons.

Cons:

  1. Will an HOA impact my new HomeThey cost you money. If you are a buyer and looking to buy a home in a neighborhood with an HOA that cost per month will affect your ability to qualify for a loan. What you get for the amount that it costs you may or may not be important to you. Make sure you know what you get for that monthly cost.
  2. They may affect your ability to use the home and the property in the manner in which you wanted to use it. For example, you may have wanted to park your new boat in your driveway.  The HOA may not let you.  Or perhaps you have three, large dogs…the HOA may limit the number of animals and the size of animals that you are allowed to have.

Pros:

  1. Homeowners Association Pro and ConWhen you live in an HOA the homes there maintain a more uniform and overall nicer look. Some would say that they maintain a higher property value because of this. You do not have to worry about your neighbor painting their home bright pink and you have to live with it.
  2. Depending on the services that are provided by the HOA, you may not have to maintain the exterior of your home. You also may not have to shovel snow or maintain your yard. Doesn’t that sound nice?
  3. You may also have your hazard insurance covered by the HOA. If that is the case you can be saving money on insurance only having to pay to insure personal belongings and the interior.  If you were to think a total loss, insurance would pay for appliances, cabinets etc.

HOA’s provide services and keep the neighborhood consistent and have some control over how you live and use your property.  Some people are OK with that, others are not.  HOA’s do cost you money.  Make sure that you understand the services that are offered and what they cost before you consider a home in an HOA. As always Contact Us with any questions you may have.