January 20 2017

4 Tips to Getting Your Finances in Order

The beginning of a new year is the perfect time to improve your finances, even though it may sound like a dull task. For...

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January 14 2017

What Is a REALTOR?

A real estate agent is a REALTOR when he or she is a member of the NATIONAL ASSOCIATION OF REALTORS, The Voice for Real Estate --...

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January 14 2017

What Your Home Inspection Should Cover

Siding: Look for dents or buckling Foundations: Look for cracks or water seepage Exterior Brick: Look for cracked bricks or...

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January 14 2017

What Is Appraised Value?

It's an objective opinion of value, but it's not an exact science so appraisals may differ. For buying and selling...

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January 14 2017

The Pros and Cons of Condos

Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you...

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January 05 2017

Determining the Better Fit for You – To Rent or To Buy?

If you’re looking to make a move soon, you may be faced with a common question—to rent or to buy? When determining...

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June 30 2016

8 Steps to Prepare Your Home for a Hurricane

With hurricane season approaching, it is crucial to be prepared for any kind of danger. Having a disaster plan includes knowing...

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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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