Buying a home is an important decision. Indeed, many of us do not take the plunge, because we are scared of the financial implications. However, if you sit down and look at the numbers, then you will realize how much money you can save by buying a property. You can get a higher home value at the end of your mortgage, along with plenty of tax benefits. Below are the top three tax benefits of owning a house.
Tax Benefit #1: Tax Deduction
The property tax, mortgage insurance, and the interest payments that you make are deducted from your taxable income; thus, you pay tax only on the remaining income. This has the potential to help you save a lot of money over time. For example, your annual income might be $100,000 and the total expenses from earlier might be around $10,000. So, your taxable income is only $90,000; consequently, you will pay less in taxes.
Tax Benefit #2: Tax Credit for Green Homes
The government is encouraging homeowners to improve the energy efficiency of their homes; so, they are providing tax credits. In other words, when you show the government that you made certain energy improvements to your home, you can get credits of up to 30% of the cost of your installations.
Tax Benefit #3: Sell Your Home and Avail Tax Concessions
If you plan to sell your house, you can make use of tax concessions, as long as you meet certain requirements. For example, you can get capital gains exclusion for up to $500,000 if you are a married couple; the number changes to $250,000 if you are single. This simply translates to keeping all of the profits to yourself. Likewise, any home improvements can be claimed as deductions from your sale price, for the purpose of taxes.