Not only is buying a house a good investment for you to make when you are ready, but it can also be a great way to get some tax benefits too. There are tax benefits offered to homeowners that last a lifetime, but the majority of the tax benefits you can receive will occur the year you purchase a house. If you have never owned a home before, here are some of the key benefits you will experience from buying a house.
Write off points and expenses of the loan
When you file your taxes for the year in which you purchased a home, you will have the unique opportunity to write off expenses related to purchasing the home. One of these is the amount you spent on points. A point is something in the mortgage industry that you can purchase to receive a lower rate of interest on your loan. If you purchased points on your loan, ask your tax professional if you can write them off. They can typically be written off on taxes, and there might be other types of fees you paid for your loan that you can also write off. You can only write these off once, though, so it's important to include them on your income taxes the next time you file.
You also have the right to write off any interest you pay on your mortgage, and the interest on a mortgage is always highest during the first year. As you slowly repay the balance on your loan, the interest you pay each year will decrease. This occurs because your principle balance will slowly decrease over time. Year after year, you will make the same payment amount, but more of the payments you make will go towards principle as your loan matures. To write this off, you will need to itemize your deductions on your tax return, and you can write off your mortgage interest every year for as long as you pay it.
The other thing you can write off on your taxes is the amount of money you pay for property taxes on your house. This is another expense that can be included when itemizing your deductions, and you should include it if you itemize.
These tax benefits can help reduce your tax liability, and you can receive these if you buy a house. To learn about other benefits of homeownership, talk to a real estate agent. Click here for more information about homes for sale in your area.