Your new home and your taxes

Website design By BotEap.comAll citizens seek tax breaks in one way or another. Perhaps the most publicized way to save money on your tax bill is through home ownership. Most everyone knows about the mortgage interest deduction, which allows for a huge tax break when included on the standard Schedule A form. Plus, there are at least a half dozen other ways to lower your tax bill if you’re a homeowner. . Everything from energy loans to mortgage insurance is deductible and can add up to thousands of dollars in tax relief for the typical homeowner.

Website design By BotEap.comHistorically, the US tax code has subsidized the act of buying a home. Lawmakers in decades past created a system whereby a homeowner could reduce tax bills to offset the cost of buying and maintaining a residence. Unlike renting, home ownership offers a huge tax break. When all is said and done, and April 15 rolls around, citizens who own a home have a huge advantage over those who don’t.

Website design By BotEap.comTo take advantage of the tax benefits mentioned above, you will need to itemize your deductions on a Schedule A and attach it to the main body of the tax form. In most cases, the mortgage interest deduction alone is much higher than the so-called standard deduction.

Website design By BotEap.comIn addition to mortgage interest, homeowners can split their tax bills and get tax breaks by deducting mortgage insurance, charitable contributions, points paid to a lender, and property taxes. It all adds up, which is why homeowners walk out of tax season with a much smaller bill than if they were simply renting the property.

Website design By BotEap.comRecent changes to the code allow homeowners to receive a credit for specific improvements and deduct mortgage insurance premiums. Banks and other lenders sometimes require buyers to obtain mortgage insurance when the amount financed exceeds 78 percent of the home’s total appraised value. Any legitimate improvement that increases a home’s energy efficiency is another way to get tax relief. The IRS allows homeowners a direct tax credit of up to $500 on 10 percent of the cost of such improvements.

Website design By BotEap.comWhen it comes to tax breaks, many deductions are available to homeowners, as well as a credit. After factoring in mortgage interest, mortgage insurance premiums, energy upgrades, property taxes, points, charitable contributions, and state tax withholding, homeowners can greatly reduce their tax bills. every year.