chicago cpa
Tax advantages of buying a home

Tax advantages of buying a home in Hanover Park

Living in the United States, being able to own a home would be quite an achievement, and the dream of every citizen. However, buying your own comes with a lot of risks and challenges – mortgage and taxes, among many others. Yet, there are certain financial benefits of homeownership, right around the year. In terms of tax, there’s good news for you, i.e. it can bring you tax benefits. Continue reading to find out how to earn tax benefits with your home in Hanover Park.

Why is it good to own a home in Hanover Park?

Prior to our generation, everyone considered that owning your home makes you financially savvy. However, during the past decade, the turbulence in the real estate market, followed by a massive recession, diminished everyone’s confidence in home ownership. However, if you do it right – i.e., if you buy a home that you can afford, there will definitely be financial benefits, such as:

  • Owning a home builds your wealth over time. As the years pass, the value of the home increases.
  • While you are paying the monthly mortgage portion, the equity of the home increases.
  • It is benefited in long term to buy than to rent
  • Mortgage is more like a forced saving – you gain equity each month, while paying the monthly mortgage portion
  • Tax benefits – there are plenty! These tax deductions will give a substantial reduction on your tax bill

How my new home in Hanover Park does gives me tax benefits

There are several ways in which you earn tax benefits on your home.

  • Mortgage deduction – through mortgage deduction, the homeowners can deduct the mortgage interest from their tax obligation. This gives a significant deduction on your tax, because in the beginning of mortgage, the interest portion of the monthly mortgage payment is larger than the capital portion.
  • Tax deduction on equity – in addition to the mortgage interest, the interest paid on home equity loan also can be deducted from tax. This will allow you to trade the debt on your credit card, with your home equity loan. So, while getting a tax deduction on the interest, you can also pay the credit card on a lower interest rate.
  • Deductions on multiple properties – if you own a second property, which isn’t necessarily a house – it could be a RV or a boat, still the mortgage interest on that property too is deductible. However, the second property tax deduction is subjected to conditions. I.e. if you don’t vacation on this 2nd property for at least 14 days a year, it’s considered a residential rental property, and taxed accordingly.
  • Deductible property tax – the real estate property tax on a person’s primary residence and the vacation home are fully deducted from tax.
  • Home improvements – save your receipts and records for all the improvements and renovations you do in your home. Although you can’t deduct those expenses right away, at the point of selling, these costs are added to the purchase price, to determine the value of your home for tax purposes.
  • Energy credits – If you make energy serving improvements (e.g. solar panel installation) to your primary residence, that will give you additional tax benefits, in terms of energy tax credit.
  • Deduction on points –if you had paid points to get a better rate on your home loan, they too get exempted from taxation.

It’s important that you are well aware of these tax benefits, before purchasing a home of your own. Call us at any time, to learn more about the tax benefits of buying a home in Hanover Park, and how we can help you get through the painful fax filing task, so that you can happily enjoy the new life in your home sweet home.

Comments

Post Comment

Your email address will not be published. Required fields are marked *