Top Tax Benefits of Homeownership

Owning a home is considered one of the “American Dreams” for a reason. It not only provides one with a greater sense of community, it also helps families build wealth on their way to a more financially-secure future. One of the ways homeownership does this latter part is through select tax benefits only available to homeowners.

If you’re new to homeownership or you’re thinking about buying your first home, here are some of the top tax benefits you can expect to enjoy from owning your own home.

Deductions for Mortgage Interest

When you own your own home, one hundred percent of the amount of money you pay in mortgage interest is tax deductible. This applies to any first or second home for up to $1 million of mortgage debt. And, this isn’t the only type of interest that’s tax deductible when it comes to your home. You can also deduct the interest paid on home equity loans of up to $100,000.

In order to take advantage of this tax benefit, you will need your Mortgage Interest Statement (Form 1098), which you get from your lender every year. This statement shows the total amount of interest you paid on your mortgage during the tax year that just ended.

Deductions for Real Estate Taxes

When you own a home, you’re able to deduct any state and/or local real estate taxes you paid throughout the year.

Exclusions for Capital Gains

Tax benefits for homeownership aren’t restricted to buying and owning a home. You can also take advantage of certain tax benefits for selling your home. One of the most beneficial is the exclusion for capital gains. If you successfully sell your home for a profit, you aren’t required to pay capital gains tax on the profit from the sale. According to current tax laws, if you are married and you have owned and occupied your principal residence for at least two of the past five years, you are exempted from having to pay any taxes on the first $500,000 in profits from the sale of your home. If you’re single, then you don’t have to pay tax on your first $250,000 of profits.

Deductions for Mortgage Insurance Premiums

Another deduction available to homeowners is for their mortgage insurance premiums. If you purchased a home without putting at least 20% down, then odds are you had to purchase mortgage insurance, and the amount of money you paid out in premiums for that insurance over the past year is eligible for deduction from your income taxes.

Contact Trusst’s Builders in Wilmington NC Today!

There is no better time to take advantage of the tax benefits of homeownership. If you want to enjoy all the benefits of owning your very own home, call Trusst Builder Group today at 910-371-0304 to schedule a consultation with one of our architects. We’ll help you build a home that truly represents the American Dream.