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A Tax Shelter
that is Shelter.
In addition to the many advantages of homeownership,
homes come with a major financial advantage - tax benefits. Owning a home
instead of renting can lead to a significant amount of savings when tax
time rolls around. Buying, selling or owning real estate can help you
reap some of the biggest tax advantages available.
Benefits for taxpayers include:
Most homeowners can deduct property taxes and interest paid on their mortgage
every year of ownership. Interest paid on a second mortgage may also be
deductible if the total of the first and second mortgages is no greater
than one million dollars. Homeowners can also borrow against the equity
they build. Equity from a home can be used to improve the property, buy
a car or pay for an education, and the homeowner may have the ability
to deduct the interest from their federal taxes. Renters don't have this
opportunity.
Single tax payers owe no tax on the first $250,000
of profit from the sale of a
principal residence. The amount is $500,000 of profit for married couples
filing
jointly. Certain closing costs may be deductible if the move is job-related
and the
relocation is 50 or more miles from the previous residence.
Is there a best time of year to buy a home? For
tax purposes, the earlier in the year, the better. If you purchase a home
during the first six months of a year, you can deduct closing costs, and
will have more months of deductible mortgage interest. Of course owning
a home will save you money on your taxes whenever it is purchased."
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