As a new homeowner, it’s important to make the most of your home purchase. Buying is often a smart financial choice because you can eliminate high rent while building up equity. In addition, you have an opportunity for tax write-offs. Many of these tax breaks are well-known, but some are a bit more obscure. Make sure you get the most bang for your buck during tax season.
Tax Breaks for Homeowners
For simplified tax purposes, let’s assume your new home will be your main place of residence.
Home Mortgage Interest Deduction
With this deduction, you can decrease your taxable income by the amount of interest you paid over the calendar year.
Mortgage Interest Credit
Lower-income individuals can apply for this credit before buying a home. Having a mortgage interest credit enables you to claim a tax credit for some portion of your mortgage.
Mortgage Points Deduction
When closing on a home, some people choose to pay mortgage points directly to their lender. This practice decreases the interest rate on their home loan. If you paid mortgage points when you bought your home, the amount is tax deductible.
Tax-Free IRA Withdrawals
As a first-time homebuyer, you may use IRA funds as a down payment. You will not have to pay a tax penalty. If you have a Roth IRA, you can withdraw funds at any time because you’ve already paid taxes on this money.
Property Tax Deduction
You can deduct local property taxes from your taxable income. However, as of Jan. 1, 2018, you cannot deduct property tax amounts beyond $10,000.
Home Improvement Tax Deduction
These tax deductions do exist, but they’re incredibly specific. For instance, if you must make improvements to your home for medical reasons, you can write off the amount.
Home Energy Tax Credit
Owning your own home can be a rewarding life experience. Have you been blissfully unaware that your home can also save you money? It’s not too late to put these tax breaks to good use. However, make sure you educate yourself on the most recent tax laws, since they change from time to time.
If all that tax lingo makes you nervous, consider using a tax preparer or CPA. These professionals are trained to get you the most money possible without any hassle.
Hire Professional Movers For Extra Peace Of Mind
Have you recently purchased a new home? Using a local moving company like Ameritex can save you both time and stress. We serve all areas of Houston and its suburbs. With a stress-free move day guarantee and a referral rate of over 95%, you can’t go wrong trusting your move to Ameritex.
Call 713.484.6683 to schedule your move today.