Being a homeowner has plenty of advantages. One of the most significant advantages is receiving tax benefits granted by the federal government to encourage homeownership, in turn reducing your tax bill at the end of the year. This can help save you thousands of dollars and allow you to reinvest the savings into buying more properties or upgrading your current home.
This article discusses the tax benefits of owning a home and why you should consider buying with the Kim Holland Homes Team in the Massapequa area.
What are tax benefits?
Tax benefits include all the laws that allow taxpayers to reduce their taxable income through tax write-offs, credits, or exclusions. Real estate investors use the tax write-offs from their real estate expenses and then pay less in taxes at the end of the year.
Tax benefits offer the following advantages for homeowners and real estate investors:
● Deducting your mortgage interest and mortgage insurance from your taxable income
● Using your home office as a tax deduction
● Using losses and expenses as tax write-offs
What are tax write-offs?
Tax write-offs are expenses that qualify for a tax incentive which lowers your taxable income. It’s important to know that not all expenses are tax-deductible, which is why it helps to work with a qualified tax professional when conducting your tax planning.
Tax write-offs are also known as tax deductions, and the terms are often used interchangeably. Individuals, small businesses, corporations, and self-employed workers can take advantage of the tax write-offs specified in the US Tax Code.
Types of tax write-offs
There are plenty of different tax write-offs that homeowners and investors use in real estate transactions. First, the amount you pay in mortgage interest is typically deductible when you decide to make upgrades to your primary or secondary residence.
Another common tax write-off is for mortgage insurance. All FHA and some conventional loans come with monthly mortgage insurance that borrowers can use to reduce their tax liability, similar to the mortgage interest deduction.
Those who run their business in a home office can also use that as a tax write-off. This deduction requires you to use a part of your home to operate your business, and you can deduct an amount based on the square footage of your home office in your living space.
The last common tax write-off is the ability to collect tax-free profits on the sale of your home. Capital gains up to $250,000 are tax-free for an individual or up to $500,000 for married couples.
Owning a home and getting involved in real estate is one of the best ways to build a sustainable income from homeownership and investing. The tax benefits are just icing on the cake and make real estate that much more attractive for new investors and first-time homebuyers.
Are you ready to start your home search in the Massapequa area? The Kim Holland Homes Team consistently gets our clients the results they are looking for in real estate. Contact us today to find out why now is the best time to buy a home in the Massapequa area.