Homeowner Tax Breaks
Owning your own home can be a source of pride and comfort, but it can also mean significant tax breaks. Talk to a tax advisor or attorney to see if you can take advantage of some of these or other potential tax benefits of homeownership:
1. Deductible mortgage interest. If you itemize deductions, you may be able to deduct the interest on a home mortgage loan of up to $1 million on a primary or secondary residence. See IRS Publication 530, "Tax Information for Homeowners," available at www.irs.gov.
2. Deductible property taxes. Most states and localities levy property taxes, which are also generally deductible on your federal return.
3. Deductible interest on home equity loans and lines of credit. Generally, the interest on loans of up to $1 million is deductible if the loan is for home improvements. If you use the loan for other purposes — such as debt consolidation, a major purchase or education funding — you are limited to deducting the interest paid on a loan of up to $100,000.
4. Capital gains exclusion on home sale. If you own your home and have used it as your primary residence for at least two of the five years prior to selling the home, married couples filing jointly may be able to exclude up to $500,000 in capital gains on the sale. Single filers can exclude up to $250,000.* Be sure to retain receipts for home improvements, as you may be able to add those expenses to the home's purchase price to establish your basis. See IRS Publication 523, "Selling Your Home," at www.irs.gov for more information.
Ready to buy a home?
With low mortgage interest rates and home prices still affordable, now may be a great time to buy a home. Contact SCCU to find out about our mortgage offerings.