The benefits of a owning your own home are plentiful but one of the significant benefits are the numerous Tax Write'Off's that are available to you as a one time occurrence and also the numerous year after year deductions as well. These numerous deductions can potentially lower your Tax Bracket ensuring that you get to keep more of your hard earned money. Year after Year Deductions:1: Mortgage Interest The mortgage payment consists of Principal & Interest of which the majority of the payment is allocated towards interest in the beginning of the loan on a sliding scale for the life of the loan. Example: A $400,000 loan amount @ 4% for 30 years has a total principal & interest payment of $1,909.66 of which the 12 months interest portion of $15,871.79 (if bought on January 1st) is a write off that you will get annually for the life of the loan on a sliding scale till the loan is paid off. 2: Property Taxes These are the taxes that you pay on the home every year, you can write this off each year. 3: Mortgage Insurance (PMI or MIP) This write off is contingent upon your income (Single at or under $50,000 & Married at or under $100,000) One Time Deductions:4: Points Paid: If you've decided to pay points to lower your interest rate 1 point is equal to 1% of your Loan Amount. The IRS treats the point(s) paid as prepaid interest & for this reason it's eligible as a deduction. If this was done for your first home you can take the deduction all at once. If this was done on a second home or on a refinance it would be spread out upon the life of the loan. 5: Energy Efficient tax credit: If you've made efforts to make your home more energy efficient by installing equipment like energy-efficient windows, storm doors, asphalt or metal roofs, insulation, air-conditioning and heating systems, the IRS wants to give you a tax credit of up to $500. 6: Renewable Energy tax credit: If you’ve installed equipment that uses renewable sources of energy such as the sun and wind, to help power your home, you may be eligible for the Renewable Energy Efficiency Property Credit. This tax credit may be up to a 30% of the cost of the installation & equipment. 7: Home expenses and improvement: You can't write off the cost of Home Improvements; Material or Labor directly. You can however add it to the cost when you sell the property to lower your capital gains. 8: Leverage Financial Products:
Other Deductions:9: Capital Gains Exclusion (Keep more profits when you sell): If you live in the home for more than two years then sell you can keep the profits of up to:
10: 2-4 Family Home: If you own & live in a 2 - 4 unit home you get the above benefits and can additionally write-off:
|
Potentially Lower Tax Bracket |
Higher Write-Off's |
Larger Potential Tax Refund |
Lower Taxable Income |
2017 Tax Bracket: Single
Tax bracket |
Income after deductions |
Taxes Owed |
10% |
$0 - $9,32 |
10% net |
15% |
$9,326 - $37,95 |
$932.50 + 15% of anything over $9,325 |
25% |
$37,951 - $91,900 |
$5,226.25 + 25% of anything over $37,950 |
28% |
$91,901 - $191,650 |
$18,713.75 + 28% of anything over $91,900 |
33% |
$191,651 - $416,700 |
$46,643.75 + 33% of anything over $191,650 |
35% |
$416,701 - $418,400 |
$120,910.25 + 35% of anything over $416,700 |
39.60% |
+ $418,401 |
$121,505.25 + 39.6% of anything over $418,400 |
2017 TAX BRACKET: Married Joint
Tax bracket |
Income after deductions |
Taxes Owed |
10% |
$0 - $18,650 |
10% of taxable income |
15% |
$18,651 - $75,900 |
$1,865 + 15% of anything over $18,650 |
25% |
$75,901 - $153,100 |
$10,452.50 + 25% of anything over $75,900 |
28% |
$153,101 - $233,350 |
$29,752.50 + 28% of anything over $153,100 |
33% |
$233,351 - $416,700 |
$52,222.50 + 33% of anything over $233,350 |
35% |
$416,701 - $470,700 |
$112,728 + 35% of anything over $416,700 |
39.60% |
+$470,701 |
$131,628 + 39.6% of anything over $470,700 |
Free Info:
- Free E-Book: Mortgage Basics The Guidebook
- WHAT TO & NOT TO DO AFTER GETTING PRE-APPROVED
- A PRE-APPROVAL IS YOUR FIRST STEP
- MORTGAGE DOCUMENT CHECKLIST
- MORTGAGE: BASIC REQUIREMENTS & MISCONCEPTIONS
- RENTING VS. BUYING A HOME PROS & CONS
- HOW TO BUY A HOME
- WHERE BUYERS FIND THEIR HOMES
- CREDIT TIPS: HOW TO RAISE YOUR SCORE
- 4 BENEFITS OF HOME OWNERSHIP
- 5 REASONS TO USE A BUYER’S AGENT
4 Comments
George
3/1/2017 07:08:13 am
great article
Reply
4/19/2017 11:22:11 am
This is a great article. It is full of interesting tips and information for those considering becoming homeowners. Thank you for sharing this with us. My clients truly appreciate your industry knowledge and insights. #glrosario
Reply
4/19/2017 11:26:17 am
Mohamed. I have to tell you that I truly appreciate our friendship. You bring such added value to my business and my life. This is a great article. It is full of interesting tips and information for those considering becoming homeowners. Thank you for sharing this with us. My clients truly appreciate your industry knowledge and insights. #glrosario #CBBigApple
Reply
Mohamed T Gulamali
6/1/2017 07:01:40 pm
Thanks George I really appreciate it
Reply