Being a Homeowner Has Multiple Tax Benefits

Being a Homeowner Has Multiple Tax Benefits

Being a Homeowner Has Multiple Tax Benefits

Being a Homeowner Has Multiple Tax Benefits

It’s tax season once again. Ready or not, we are required to file income taxes. If you have just become a homeowner, or have been one for years, you can take advantage of various tax breaks that help ease your tax burden.

Here are some ways homeowners can use tax breaks to decrease the amount of taxes they are charged.

  1. Mortgage Interest

Your monthly mortgage payment is made up of principal and interest. By itemizing your taxes, you may be able to claim all of your mortgage interest as a deduction. For example, if your mortgage debt is $750,000 or less, you’re able to deduct the entire amount you paid in interest in the year prior. If your mortgage originated before December 15, 2017, you can deduct the interest on up to 1 million dollars of mortgage debt.

Depending on your mortgage rate and term, using your mortgage interest as a tax break may save you hundreds of dollars owed.

  1. Home Equity Lines of Credit (HELOCs)

HELOCs were once more widely accepted as tax breaks, but there was a change to the tax laws with the Tax Cuts and Jobs Acts of 2017. Until then, homeowners were able to deduct interest on a HELOC debt that was used for any reason. There are two key changes affecting how homeowners can now use HELOC debt as tax breaks.

  • The HELOC debt must be used to finance a home renovation to be used as a tax break.
  • The amount of the HELOC must be added to the mortgage debt, and together they must equal $750,000 or less.

Even with the changes, HELOCs may still be able to save you a bit on your taxes this year.

  1. Property Taxes

This is the one time a year when homeowners may be grateful for their area’s high taxes. City and county taxes can be used as deductions when filing your taxes if you itemize your expenses. The limit on this tax break is $10,000. This break offers a bit of relief, especially if your home is located in an area with high taxes.

  1. Mortgage Discount Points

Sometimes homeowners opt to buy points during the mortgage process in order to lower their mortgage rate. You may be able to deduct the money you spent on these points. Be warned that there are several rules about using mortgage discount points as a tax break, such as the points must be paid directly instead of with your loan, and they must be calculated as a percentage of your mortgage. Ask your CPA if you qualify for this tax break.

  1. Home Office

Working from home may offer you a tax advantage. In 2018, claiming a home office as a tax break got more difficult, but it’s still possible. You must use your home office as your primary workspace, and employees must meet additional tests that self-employed workers don’t.

If you qualify, you can deduct your home office space as a percentage of your home. For example, if you have a 2000 square-foot home and your home office is 200 square-feet, you can deduct 10% of your insurance, homeowner’s associations fees, utilities, and other expenses related to your home.

  1. Energy Efficiency

Going green and reducing your carbon footprint can save you money on your tax bill. The government has put several credits in place for homeowners who make energy-efficient investments in their home. Installing solar panels and solar-powered water heaters to turbines and using fuel cells that rely on a renewable resource all rate as a tax credit under the Residential Renewable Energy Tax Credit. Tax payers can use up to 30% of the cost of the energy-efficient upgrade, including installation, as a tax deduction.

Nobody wants to pay more taxes than they should. Understanding how to use your home for tax breaks can be confusing. Luckily, being a homeowner offers distinct tax advantages that renters don’t get to use. Educating yourself is the first step in making certain you’re using the maximum amount of tax breaks owed to you. Be sure to talk to your accountant about the terms of your mortgage, your taxes, and any upgrades you’ve made to your home to make it more energy efficient.


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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020