It goes without saying that purchasing a new home is the largest single investment most people will ever make. And, experts agree that it can be the best investment you can make in your financial portfolio. The reason – tax advantages instituted by the federal government to encourage home ownership! These benefits, according LendingTree.com can help reduce the cost of buying and owning a new home and also leave you with a profit when it’s time to sell!
Mortgage Interest: One of the biggest incentives to owning a home is the interest paid on the mortgage is tax-deductible. This deduction also includes a second home, as long as the owner resides in the home 14 days per year or 10 percent as much time as it’s rented.
According to LendingTree up to $100,000 of other debt that uses your home as security (i.e. a home equity loan). However, the amount you can deduct may be limited if the money you borrow raises your debt above the home’s actual market value.
Additional federal tax deductions include any amount you pay for points to reduce the interest rate of your mortgage or other loan linked to your home. In most cases, the points on a mortgage to buy or build your principal home can be deducted fully in the first year. However, if you refinance, take a home equity loan, or a loan secured by a second home, the points must be deducted over the life of the new loan. The exception is if you use part of a refinanced mortgage to improve your house; that portion of the points can be deducted in the same year.
Tax-free profits: Another major advantage of home ownership is that (at this time) any profit made on the sale of your primary residence is not subject to federal income tax. Currently the tax law allows homeowners to exclude up to $250,000 in profit from the sale of their principal home ($500,000 for a couple who file jointly) from federal income tax. Important reminders: The home must be the principal residence, and the homeowner (and spouse, where applicable) must have lived there for at least two of the previous five years. This tax exemption can only be claimed once every two years.
Property taxes
Property taxes paid are an income tax deduction. This applies to both the principal home and any others you may own. Note any money held in escrow to pay future taxes is not deductible.
Moving expenses
LendingTree also advises moving costs may be deducted from federal income tax when the homeowner purchases a home at least 50 miles closer to their employer than their old home. To qualify, the homeowner must continue to work full-time in the general area of your job for 39 weeks during the following calendar year. If you’re self-employed and work in your home, any move of 50 miles or more will make your moving expenses deductible. However, you must also work full-time near the new location for 78 weeks during the next 24 months.Disclaimer: It’s important to remember that tax rules vary based on income and other factors. Campbell Homes recommends that you consult an accountant or financial advisor about your personal situation prior to purchasing a new home.
If you are still renting and interested in the tax advantages and saving created by owning a new home, give us a call to see how we can start building your financial portfolio with a brand new Colorado Springs home. With today’s low interest rates, you’ll be pleasantly surprised at how much home you can actually afford!
Since 1965 Campbell Homes has been building energy efficient stylish and comfortable new homes for sale in Colorado Springs in the safe and secure locations and master planned Colorado Springs Communities with excellent community amenities and the best schools in Colorado Springs. Heck, we’ll even throw in a free finished basement (but, only until the end of the year)!
Starting in the low $200s, NEW Campbell Homes are available for immediate move in for homebuyers looking to take advantage of spectacular year end savings! New Campbell Homes come standard with peace of mind and a guaranteed move-in date in seven Colorado Springs locations. Our model homes in Colorado Springs are open daily to 5 p.m. Or, for additional information visit our online sales office at www.CampbellHomes.com.
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