Buying a home for the first time can be a daunting task. While the list of formidable issues is quite long, with closing costs, loan worries, sorting out your budget, dealing with thebanks, etc., there are a few financial benefits of being a first time homebuyer as well.
You will have to consult a CPA to see which of these you qualify for, but this list is a great starting point to educate yourself on how to benefit even further from your new, home sweet home:
Mortgage Insurance, the insurance you pay on a loan with less than 20% down, can be deductible if you live in a certain income bracket.
Capital Gain Exclusions
As long as you have lived in your home for two of the past five years, you can exclude up to $250,000 (for an individual) or $500,000 (for a married couple) of profit from capital gains. This means you could possibly sell every two years and pocket your profit (subject to limitation) free from taxation.
Preferential Tax Treatment for Capital Assets
If you receive more profit than the allowable exclusion upon the sale of your home, that profit will be considered a capital asset as long as you have owned your home for more than one year.
Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. Check out the IRS Publication 530 – it contains specific tax information and the requirements for being considered a “first-time homebuyer”.
Mortgage Interest Deduction
As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Tax deductions are a huge factor when organizing your finances. Every cent that you can save goes a long way when you own a home, so you should absolutely keep deductions in mind. As always, Territory.com’s team of real estate experts are here to help you through this process and all of the other steps involved in buying a new home. Shoot us an email with your questions today: email@example.com