What Are The Government Tax Consequences Of Buying A Home?
For many people, purchasing a home is a great way to build long term wealth through home appreciation and debt repayment. However, one benefit that is often not considered is the tax benefits. There are several positive government tax consequences of buying a home that could save you a considerable amount of money.
Mortgage Deductions
The first of the positive government tax consequences of buying a home that could save you a lot of money is being able to deduct mortgage interest. For the first few years of owning a home mortgage interest accounts for nearly 90% of your overall payment. While this may seem like wasted money, it will save you a considerable amount of money on your tax return. For a person in the 33% tax bracket, 33 cents of every dollar spent in mortgage interest will be returned during tax season.
Real Estate Taxes
The second of the positive government tax consequences of buying a home that could save you a lot of money is being able to deduct real estate taxes. While many people complain that their real estate taxes are too high, they do not properly consider that the taxes are deductible. Therefore as real estate taxes increase, a person’s federal income tax responsibilities will decrease.
Home Improvements
The third of the positive government tax consequences of buying a home that could save you a lot of money are deductions for home improvements. To stimulate the economy and help the environment, the government offers many different tax deductions for those people that install environmentally friendly amenities to their homes. These could include installing new windows, doors, or even buying a new refrigerator.
Related posts:
- What Are The Government Tax Consequences Of Selling A Home?
- What Tax Breaks Are First Time Home Buyers Entitled To?
- Is There a Government Rule For Fair Market Value On A Home?
- Will The Home Buyer Tax Credit Help?
- Are There Tax Breaks For First Time Home Buyers?
Thank you for sharing this information. We’re always looking for valuable resources to send to clients and my coworkers, and this article is absolutely worth sharing!