Tax Advantages of Homeownership
January 30, 2013
Homeownership invokes more than a sense of pride and freedom.
It is also a long-term investment opportunity. It’s never a bad time to speak to your tax advisor about the tax advantages associated with homeownership. Some of these benefits include:
- Reduce your taxable income: On your itemized income tax return, you may be able to deduct mortgage interest payments, property taxes and points paid to lower your loan's interest rate.
- Take advantage of special tax breaks: You might receive a tax credit or be able to take a tax deduction for certain home improvement projects if they are for medical reasons or if they fall into one of the many energy savings home improvement categories.
- Lower tax on capital gains when you sell: When you sell your home, you will not have to pay federal income tax on capital gains of up to $500,000 for a married couple and $250,000 if you are single. This applies to the sale of a principal residence owned and occupied for at least two of the last five years.