Ownership of your own home is replete with privileges. Two of the top tax advantages were listed in our previous blog. In this blog, Palm State Mortgage Company brings you three more great tax advantages you won’t get if you are a renter.
So, let’s check out this windfall of tax wonders, because we don’t want you to miss out on a single break. Please read or review our last blog for details of the first two tax breaks on our list of the Top Breaks, Numbers 1 and 2. Check it out to see the secrets of Mortgage Interest Credit and Mortgage Interest Deduction.
Ownership Advantage Number 3: Owning Your Home Allows Deduction of Mortgage Points!
You might miss a generous credit if you do not know that you get a deduction for buying points to get your mortgage loan. Yvette Best of Best Services Unlimited in Fayetteville, GA., stated a common concern. “Most homeowners overlook the deduction of points they pay to secure a mortgage loan.”
She added, “Buying points to lower the interest rate on your mortgage loan is one of the best tax breaks available right now. The return on investment is twofold because you get to deduct the cost of the points and the amount on interest paid in the same year as the home purchase.”
Ownership Advantage Number 4: Mortgage Points Tax Deductions for your Home Have Limits!
Palm State Mortgage Company explains to new home buyers, they should itemize on their tax statement in order to make this deduction. Likewise, you will need to disclose that these particular itemized fees are for “points.”
Just as in the case of Mortgage Interest Deductions, you must keep your home loan under a million dollars to qualify for this benefit. There are more rules for this deduction:
Note that the mortgage point deductibility break is designed for your primary residence.
As Fox Business news states, “when the loan is tied to a property that is not your main home, the points cannot be fully deducted in the year the loan was made. Points paid on a loan secured by a second home or vacation residence, regardless of how the cash is used, must be amortized over the life of the loan.”
For more information about the rules for deducting mortgage points, refer to this online resource. And—Good News! You might be eligible for this tax break, even if you only re-finance your home loan.
Ownership Advantage Number 5: The IRA Dip
Did you know it is possible to take up to $10,000 from your IRA without penalty if you are buying a home? If you are looking for a way to assemble your down payment or perhaps pay closing costs, this is an excellent option under certain conditions.
Normally, you would have to pay 10 percent penalty fees if you take money out of the IRA before you are 59 and a half years old. However, the IRS permits you to utilize funds from your IRA without that penalty, when it’s for your home. Of course you still have to pay your regular tax on the money you take out early.
Experts tell us this privilege is extended to many in the home-buying situation. “This incentive applies to current homeowners as well because you’re eligible for first-time buyer status if you haven’t owned a home in two years.” Experts remind us that this special withdrawal does not apply to a 401K, only to an IRA.
Experts say, “If both you and your spouse are first-time home buyers (and you both have IRAs), each of you can withdraw up to $10,000 without having to pay the 10% penalty. Thus, together a couple can withdraw up to $20,000.”
Find out more about the penalty-free early IRA withdrawal for your down payment, from the legal experts at this convenient online source
We hope you found some inspiration within this blog to double check the tax incentives involved with home ownership. It is true that owning a home can bring you new responsibilities and new budgetary adjustments. Palm State Mortgage Company wants you to know ownership has its advantages, both in the wallets and in the hearts of American families.