Renters Miss Out on Homeowner Benefits Category: Miscellaneous
16305
post-template-default,single,single-post,postid-16305,single-format-standard,bridge-core-3.1.8,qode-page-transition-enabled,ajax_fade,page_not_loaded,,qode-theme-ver-30.5,qode-theme-bridge,disabled_footer_bottom,qode_header_in_grid,wpb-js-composer js-comp-ver-7.6,vc_responsive,elementor-default,elementor-kit-17134
 

Renters Miss Out on Homeowner Benefits Category: Miscellaneous

Renters Miss Out on Homeowner Benefits Category: Miscellaneous

If you rent rather than own a home, you could be missing out on tax benefits that favor home ownership. The current low interest rates make the cost of getting a mortgage relatively inexpensive, despite U.S. house prices at record highs.

Whether you decide to wait for the housing market to cool, or wish to take advantage of low interest rates while they last, take these tax benefits of home ownership into account:

Equity build. When you pay rent, you’ll never see that money again. But when you pay your mortgage, you build equity that you realize when you sell your home. As long as the value of your home stays the same or improves, it’s like a savings account built into your house payments.

Tax-free profits. Profits you make selling your home for more than you paid for it are usually tax-free, up to $250,000 for individuals and $500,000 for married couples filing jointly.

Mortgage interest deduction. Homeowners get to deduct the cost of the mortgage interest they pay as an itemized deduction. Since interest payments are front-loaded onto the early years of a mortgage, it makes this a big tax deduction for new homeowners.

Property tax deduction. Property taxes are also deductible by homeowners as an itemized deduction. The average U.S. homeowner pays just over $2,000 in property taxes, but this can be much greater in high-tax areas.

Mortgage interest rate point deduction. When you buy a home, you often pay your lender an extra fee to lower the interest rate on your mortgage. These “mortgage points” can be deducted from your tax bill over time, or all at once when you sell your house.

Buying a home is a complicated decision, especially in a seller’s market. But the tax savings over time can be significant. If you need advice on this or other tax-related matters, don’t hesitate to call.