Home Buyer Tax Advantages
Did you know that you can take advantage of some amazing tax writeoffs when you buy a house? In this video, I’m going to walk you through the tax advantages of homeownership to see if owning property is right for you. We’ll look at the numbers to find out how you can benefit from these tax savings.
Making An Investment
Buying a house is super exciting, but you should be doing it for more reasons than just wanting a cool place to live. Rather, do it for the investment. One part of maximizing your real estate investment is taking advantage of the tax writeoffs.
Have you ever had your accountant tell you that you needed to buy a house? Or what about your parents? One of the many reasons they're telling you to invest in your own place is that they understand the tax advantages of owning a home versus renting one.
Interest And Closing Costs
The very first tax benefit you'll need to know about is that the interest paid on your loan as a primary residence is 100% tax-deductible. Let me show you how this works. Let's say John Doe makes about $50,000 a year and he paid a total of $8,000 in mortgage interest throughout the year, which is part of his monthly payment.
John Doe is only going to be taxed on $42,000 instead of $50,000. This means he will receive considerable tax savings. Did you know that some of your closing costs are also tax-deductible in the year you purchase or sell your property? You should give your final closing or settlement statement to your accountant. He will also have some write-offs such as closing costs, repairs, commissions, and more from that purchase or sale, depending on whether you're a buyer or a seller.
If You Want To Sell
Finally, do you want to know what the largest tax advantage is when owning real estate? When you live in your home as your primary residence and two years go by, you may want to sell. If so, you have a $250,000 exclusion if filing as single and a $500,000 exclusion as married filing jointly.
This helps offset or may completely eliminate capital gains altogether. If you're filing single and you sell your house for $250,000 more than when you bought it, that's tax-free money. Remember, always check in with your accountant if you aren't sure. By no means are we tax advisers, but we did want to mention these advantages to you. We always go back to our tax professionals for answers and guidance.
We’re Here To Help
Buying a house is exciting, and it's a great investment; part of that investment is the advantage of tax savings. So if you have any additional questions on this particular topic or home buying in general, feel free to reach out to me and I'd be happy to help you find the answer.
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