Buying a house is one of the largest purchases made within a lifetime. Along with the responsibility of owning a home comes some great perks, namely tax breaks and deductions. Knowing what these benefits are and getting a better understanding of them can help you take advantage of these perks during your homeowner journey.
Mortgage points
While earning points is great on the basketball court, it can be financially draining to a mortgage. Mortgage points are what buyers pay to lenders to secure a loan, usually given as percentage points of the total loan amount.
If you decide to pay these points during the closing of your home, then they are deductible. Taxpayers who itemize deductions on their IRS Form 1040 can usually deduct all the points they paid within the year, except for some high-income taxpayers whose itemized deductions are limited.
PMI costs
If you made a down payment of less than 20% on your home, odds are you may have to pay for private mortgage insurance until you pay off at least 20% of the loan balance.
The positive side is that homebuyers who bought their home in the year 2007 and after can deduct their PMI premiums. However, it’s best to make sure these deductibles are valid each year before filing your taxes.
Mortgage interest
Mortgage interest accounts for the largest tax deduction for most homeowners. When you receive the form 1098 from your lender, you can deduct the total amount of interest you’ve paid during the year.
Property taxes
Another deductible to not overlook is local property taxes. Consider saving the records for any property taxes you pay so that you can deduct them during tax season.
Home energy tax credits
Some states offer generous tax credits for homeowners who make home improvements to save energy. There are a number of improvements you might qualify for, including things like insulation and energy-efficient roofs as well as photovoltaic (PV) solar panels.
By keeping track of your mortgage payments and checking out your local credits, you can work with a tax expert to make the most out of your deductions during tax season.
About the Author
Ryan Mandigo
Ryan Mandigo is an award-winning professional broker associate with Realty ONE Group Dockside. Originally a native of New Hampshire, his love of real estate began 30+ years ago while swinging a hammer on a framing crew. He has always had a strong passion for helping people, whether it be assisting a couple in purchasing their first home, finding a home that fits a growing family's needs, or downsizing for those with an empty nest. He strives to build strong personal and professional relationships with being a true believer in the power of positive thinking and always willing to lend a helping hand.
He is also a co-founder and board member of the Swing Fore the Kids organization. A local charity that is 100% nonprofit and their sole purpose is to help needy children and young adults within Horry County communities. He finds great satisfaction and pleasure in seeing how working hard for a great cause and raising funds can help others in need. He is also on the Board of Directors for the Waccamaw Youth Center in Conway, where their mission is to provide at-risk youth "A Place To Call Home"
When he is not working, he enjoys music, working around the home, spending time with family and friends, turning wrenches on vintage vehicles, getting some wind therapy on the Harley or chilling with their dogs.
Some quotes he lives by - "Do what you like and like what you do" - "You have to be odd to be number one" - "Dreams don't work unless you do" And one of his favorites. "Positive and enthusiastic thinking in all you do"
