Tax breaks for home ownership can help families own their homes. Such breaks can be very advantageous to your budget, but only if you are aware of them, and how they work.
Thus, whereas existing as well as brand new homeowners qualify for some of these advantages, Palm State Mortgage especially dedicates this blog to the first time home buyers. When a first time home owner-to-be begins the mortgage process, Palm State Mortgage Company cautions him or her to be aware of the nature of Tax Breaks for Homeowners.
Tax Breaks–Happy Homeowner’s Incentives
There is no doubt that the multiple tax breaks, tax credits and home ownership deductions–all included as tax breaks–make buying a home, an attractive proposition to many families who would otherwise rent their homes.
So today, Palm State Mortgage Company Blog takes a look at our favorite top two of the the tax advantages you earn by buying a home.
Tax Breaks–Home Mortgage Interest Deduction: The Big One and Our Number One Favorite Tax Break!
Probably the most beneficial of the tax breaks available to the loan shopper is the mortgage interest deduction. This might be a critical concern to shoppers who are considering how much house they can afford for their first home. This tax break refers to the interest paid on loans of up to $1 million. Likewise, if you are married but file taxes on separate returns, it will cover $500,000.
Why does Palm State Mortgage Company say it pays especially well for first time buyers? Remember, the greatest amount of your interest is charged in the first years of your mortgage term payments. You can review the basics of your home loan at an informative online resource named The Balance.com .
Tax Breaks For You: Home Mortgage Interest Deduction and Your Tax Return
Remember to itemize on Schedule A of your Tax Return. You will see a spot to claim the Home Mortgage interest Deduction.
Check out the formula:
1. Add up all deductible expenses for the year in all categories and carefully include your home ownership expenses.
2. See if they add up to a better deduction than the standard deduction. Chances are in your favor that they will.
Watch your mail, new home owner! Your loan provider is required to send you a Form 1098. On it you will see the amount of interest you paid the previous year.
Tax Breaks For New Homeowners #2: Mortgage Interest Credit
The second homeowners’ tax incentive on our list of favorites is the First Time Home buyer’s Mortgage Interest Credit.
In the words of experts at Go Banking Rates.com, “The federal government’s mortgage interest credit provides another opportunity for first-time home buyers to claim a tax break for the mortgage interest they paid. Unlike the mortgage interest deduction — which reduces your taxable income — this mortgage interest credit directly counts against your tax bill, lowering what you owe.”
Among such experts is Deb Tomaro, a broker with RE/MAX Acclaimed Properties. She added, “Depending on the purchase price of your home, a buyer can get 20 to 30 percent of the interest they pay every year back as a straight tax credit.”
At Palm State Mortgage Company, we think that is a significant break on taxes and on home ownership. In fact, it might be something for your family to celebrate! It might make part of the difference between living life as renters and living life in control of your own property.
Mortgage Interest Credit–Here’s A Sample Breakdown:
1. Brad and Liz prepare their return and discover they owe 3,000.00 in taxes for the year.
2. Then they complete IRS Form 8396. This is the form for Mortgage Interest Credit. According to their completed form they are eligible for 3,000.00
3. They apply the 3,000.00 Mortgage Interest Credit, and they now owe nothing on their tax return. Celebrate!
Caution With Tax Breaks: Check Your Eligiblity and Subtract Your Deduction
To be eligible for this tax break, keep your Mortgage Credit Certificate handy. You will receive it when you originate the mortgage.It contains valuable information, like how much interest you have the right to claim.
Tax Break Red Alert: Now if you also claim the Mortgage Interest Deduction on the tax form, you will reduce the credit by THAT amount.
You do not get to double your pleasure!
But it’s still worthy of celebration!
Go ahead and break out into your happy homeowner’s dance!
Thank you for reading the blog at Palm State Mortgage Company. We hope you return next week to discover more about the tax breaks, your mortgage, and home ownership–It’s all news you can really use!