Tax Advantages of Owning a Home
Who wouldn’t want to own a house of their dreams? It is truly said, there is no place like home! Owning a home not only helps in obtaining capital gains exclusion, but also has various tax benefits. Moreover, owning a house is much better than renting one as you can pay off your own home or building instead of paying the landlord’s! Paying off your mortgage every month is like a forced saving plan -and yes, that’s a good thing. Besides savings, homeowners can also enjoy some tax savings. Read on to find out more.
One important tax benefit if you buy a home in 2015 is an advantage to use points for lesser interest rates.The IRS lets you deduct points in the year you paid them if, among other things, the loan is to purchase or build your main home. A homeowner who pays points on a refinanced loan is also eligible for this tax break. One point typically lowers your interest rate by about 0.25%. Hence, points are tax-deductible if you purchase a new house, provided some standard requiremnets are met.
Another tax benefit a home owner can avail of is taking benefits of energy credits. So, if you purcahse a house in the current year and install a few energy saving systems, you can write off 30% of the cost as part of the Residential Renewable Energy Tax Credit. Hence, consider fitting energy-savings systems like solar panels, fuel cell property, wind turbines or solar water heaters in your new home. However, bearr one thing in mind. If the amount of your tax credit exceeds your tax liability, you can roll the credit over to your next year’s taxes.
Renting a home won’t provide you with any equity gains. Moreover, landlors may not be nice and you may not even be able to renew your lease on the same or similar terms and conditions. Plus, you will have to shell out some money while relocating- maybe towards mail redirection, security deposit, paying the movers, etc. Most people are not aware of the fact that renting does not offer any kind of tax breaks. According to a study by WSJ, rent prices have been on the rise since the past five years, with a growth rate of 15.2% since 2009. What would you prefer- paying more for rent or availing the tax benefits on owning your own home?
To all the people out there who have to yet make a decision, whether to rent or purchase, we advise you to purchase your own home. You will have stable residency and a chance to build equity. You can receive savings and tax credits for becoming a home owner. Moreover, the government also provides tax incentives for homeowners. The other perks include exclusion of profits from capital gains and energy-saving rebates.