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Virtual Homebuying Is The New Normal

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April 20 2020

Tips to Lead a Greener Lifestyle in Your Home

We celebrate the 50th anniversary of Earth Day this year. It's a great time to assess our habits at home and think about...

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April 15 2020

8 Simple Design Ideas for Your Dream Backyard

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April 08 2020

Family Easter Fun While Social Distancing

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April 01 2020

What is a Rate Buydown?

What are mortgage points and how do they work? Simply put, a mortgage rate buydown is when a borrower pays an...

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March 27 2020

Spring Cleaning Tips

It's time to kick off spring cleaning! We’ve compiled some tips to help you tackle cleaning with less stress.

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March 23 2020

Mortgage Rates, Explained

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March 17 2020

The Coronavirus & Your Finances

 This has been a period of uncertainty for all of us, but you can be assured that our dedication to you remains...

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March 11 2020

12 Pawsome Ways to Ensure Your Pet Loves Your New Home Too

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Financial IQ February 06 2020

Tax Incentives for Homeowners*

The dream of homeownership comes with many financial incentives. These financial perks extend beyond the more obvious such as building equity and investing in your future, to the size of your tax return each year. Tax season is fast-approaching, so we thought it was a good time to cover the plethora of tax benefits related to owning a home!

Home Mortgage Interest Deduction

Homeowners who itemize deductions may reduce their taxable income by deducting the interest paid on their home mortgage. Homeowners are eligible to deduct interest paid on "qualified residence," defined as a taxpayer's main home or second home by the IRS. This interest can be deducted on loans up to $750,000. ($350,000 for a married homeowner filing a separate return)

Property Taxes Deduction

Deducting state and local property taxes is a major benefit to owning a home. Your state and local governments assess property taxes annually, based on the value of a property.  Property taxes paid at the state and local level are eligible for a $10,000 deduction, or $5,000 for married taxpayers filing separately. 

Mortgage Interest Credit

Lower-income homeowners who meet certain qualifications may qualify for a mortgage interest credit. This means by obtaining a mortgage credit certificate from your local government, you might be eligible to claim a portion of the mortgage interest you pay as a credit. This benefit only applies to new mortgages used for a taxpayer’s primary residence and the government entity must be contacted about obtaining an MCC prior to a borrower taking out a mortgage.

Mortgage Insurance Deduction

Should you secure a conventional loan and have a down payment that is less than 20% of the home’s purchase price, you may be required to pay for private mortgage insurance. 

The good news? PMI will be tax deductible through the end of the year. While this bill expired in 2017, an extension was placed through December 31st, 2020, meaning you can benefit if you already own a home. You may even qualify for filing an amended 2018 tax return!

There is a plethora of benefits to owning a home, but the above are some you may consider when filing your taxes for the April deadline. Get prequalified for a loan now to start taking advantage of these tax breaks for homeowners!

Sources:
IRS
U.S. News
Tax Policy Center

*Consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.

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