Blog_Top 5 Tax Savings on Real Estate
Top 5 Tax Savings on Real Estate. Having tax deductions as a homeowner are compelling reasons to own vs rent. Since today is tax day I wanted to detail the TOP 5 ways to save money on your tax return as a homeowner.
- Mortgage Interest Deduction
- Mortgage insurance deduction
- Mortgage points deduction
- SALT deduction
- Home office deduction
When you pay your mortgage, a portion of each monthly payment you make goes toward your loan's principal, while a portion goes toward interest. It's the interest portion you're eligible to deduct on your taxes.You can deduct Your loan servicer will send you a tax form summarizing that information.You can claim the full amount if the mortgage on your home is at or below $750k.
You might be paying PMI (Private Mortgage Insurance) if you purchased a home with a conventional loan and put less than 20-percent down. This temporary-but-added monthly expense is deductible.
While the PMI deduction was eliminated by the 2018 tax reform, it returned in 2020, allowing homeowners to take the deduction moving forward and retroactively for 2018 and 2019. There are restrictions: You can only claim this write-off if your home was purchased after 2006. If you recently refinanced, you may still qualify. You can also ask your loan officer about dropping your PMI, if you’re eligible.
Sometimes, mortgage borrowers pay discount points to secure a lower interest rate on their home loans. If you paid points when your mortgage closed, you may be eligible to deduct them on your tax return.
The SALT deduction is a federal tax deduction that allows some taxpayers to deduct the money they spend on state and local taxes.This deduction is a below-the-line tax deduction (only available to taxpayers who itemize) It’s only available to taxpayers who have eligible state and local taxes to deduct.It’s currently limited to $10,000.
If you're self-employed, you may be eligible to take a deduction for maintaining a home office. If your home office is 300 square feet or less and you opt to take the simplified deduction, the IRS gives you a deduction of $5 per square foot of your home that is used for business, up to a maximum of $1,500 for a 300-square-foot space.
It is always recommended to consult your professional tax advisor for all your tax benefits. If you are looking to buy a home get in touch with me to start the exciting process of becoming a homeowner.
