Tax Savings

Homeownership allows you to take advantage of many unique tax benefits.  Deductions for mortgage interest and property taxes can significantly reduce housing costs.  Homeowner tax benefits include:

 

  • Discount Points 
    The general rule of thumb is that you may deduct all the points you paid in the year you paid them, as long as you meet several qualifications, such as if your loan is secured by your main home and if you use your loan to buy or build your main home.  Even if the seller pays all the points, the buyer gets the deduction.  If you refinanced your mortgage, you may be able to deduct any points you paid to buy down the mortgage rate.  These points must be deducted proportionately over the life of the loan. 
    For the rest of the fine print and to learn when points are deductible, see IRS Publication 936, which has a handy summary for homeowners. 

  • Debt Consolidation 
    In addition to helping to lower your monthly payments and interest rate, refinancing to consolidate debt may also add to tax savings.  Unlike credit card interest, home loan interest is generally tax deductible (consult a tax professional for more details).

  • Interest on Home Equity Loans or Lines of Credit 
    Interest paid on a home equity loan or home equity line of credit may be tax deductible (up to $100,000).  Consult a tax professional for details.

  • Mortgage Insurance Premiums 
    A tax provision allowing homeowners to treat mortgage insurance premiums the same as interest is in place through 2010.  The deduction applies to premiums paid or accrued (including for prepaid mortgage insurance) on acquisition (not on refinancing) debt for mortgage insurance.  It is phased out for taxpayers (both single and married filing joint returns) with adjusted gross incomes over $100,000.

  • Capital Gain Exclusion 
    Sellers of a principal residence can exclude from taxation profits from the sale of a home, up to $500,000 for married taxpayers and $250,000 for single taxpayers. 

 

Visit Typical Federal Income Tax Savings Through the First Five Years of Homeownership to see how the tax savings associated with homeownership add up.  For more information about tax benefits, consult a tax professional or check out the IRS publication, Tax Information for Homeowners.

 

Homeownership allows you to take advantage of many unique tax benefits.  Deductions for mortgage interest and property taxes can significantly reduce housing costs.  Homeowner tax benefits include:

 

  • Discount Points 
    The general rule of thumb is that you may deduct all the points you paid in the year you paid them, as long as you meet several qualifications, such as if your loan is secured by your main home and if you use your loan to buy or build your main home.  Even if the seller pays all the points, the buyer gets the deduction.  If you refinanced your mortgage, you may be able to deduct any points you paid to buy down the mortgage rate.  These points must be deducted proportionately over the life of the loan. 
    For the rest of the fine print and to learn when points are deductible, see IRS Publication 936, which has a handy summary for homeowners. 

  • Debt Consolidation 
    In addition to helping to lower your monthly payments and interest rate, refinancing to consolidate debt may also add to tax savings.  Unlike credit card interest, home loan interest is generally tax deductible (consult a tax professional for more details).

  • Interest on Home Equity Loans or Lines of Credit 
    Interest paid on a home equity loan or home equity line of credit may be tax deductible (up to $100,000).  Consult a tax professional for details.

  • Mortgage Insurance Premiums 
    A tax provision allowing homeowners to treat mortgage insurance premiums the same as interest is in place through 2010.  The deduction applies to premiums paid or accrued (including for prepaid mortgage insurance) on acquisition (not on refinancing) debt for mortgage insurance.  It is phased out for taxpayers (both single and married filing joint returns) with adjusted gross incomes over $100,000.

  • Capital Gain Exclusion 
    Sellers of a principal residence can exclude from taxation profits from the sale of a home, up to $500,000 for married taxpayers and $250,000 for single taxpayers. 

 

Visit Typical Federal Income Tax Savings Through the First Five Years of Homeownership to see how the tax savings associated with homeownership add up.  For more information about tax benefits, consult a tax professional or check out the IRS publication, Tax Information for Homeowners.

 

 

Copyright © 2017 Capstone Mortgage Company, Inc.

  NMLS Company ID #1445; MA Broker License #MB1445


Copyright © 2017 Capstone Mortgage Company, Inc.

  NMLS Company ID #1445; MA Broker License #MB1445