Tax Benefits of Owning a Home

January 14, 2023 | Market News, New Home Tips, Tax Benefits of Owning a Home

Homeowners know that there are more costs to owning a home than just the mortgage. Maintenance, property taxes, energy bills, and more are among the other costs that can squeeze your bank account. Even though tax time isn’t a favorite for most people, owning one of the homes in Providence Forge VA and other areas can prove financially beneficial when it comes to claiming tax credits and deductions.

The biggest benefit is the deduction you can make on the interest you pay on your mortgage. All homeowners who are married and file jointly and have a mortgage of up to $750,000 are able to deduct the interest paid on their loan. Single homeowners are able to write off up to $375,000. You may also be able to deduct the interest on the home closing. You’ll receive a document from your lender at the start of the year with the amount of interest you paid the previous year.

Property taxes can be deducted up to $10,000, which helps take some of the sting out of paying them.

If you paid “points” to your lender when you first got your loan, in order to secure it or get a better rate, you can deduct any points you’ve paid. As the payment of these points is rolled into your loan, you can ask your lender to help you determine how much you’ve paid in points each month to determine the total for the year. Your 1098 form may also help you determine how much you’ve paid.

Another area where you may benefit is private mortgage insurance. If you weren’t able to pay 20% for the down payment, you likely have this insurance. Fortunately, for the time being, if you purchased your home after 2007, you can likely deduct the insurance payment if your adjusted gross income is $50,000 if you’re single, and $100,000 or less if you’re married and filing jointly. If your adjusted gross income is more than $54,500 single or filing separately or more than $109,000 married filing jointly, you cannot make the deduction. If you’re between the range, then you can make a partial deduction. This is where professionals come in handy to help you claim as much of a deduction as possible.

Finally, if you’re working from home, you may be able to claim some deductions. However, the rules are fairly stringent, so it is important to make sure you fully qualify. This is only for those who are self-employed and the space cannot be used for purposes other than work.

When you own one of the homes in Providence Forge VA, it’s good to have an understanding of the various areas where you may qualify for deductions as you prepare your taxes. It is something you can do on your own, but because of various restrictions and qualifications, it may be more useful to hire someone. What you ultimately save may make the extra cost worth it! It can definitely take some of the sting out of the costs of owning a home, ultimately making it financially worthwhile.