Tax benefits of buying a home
While your mortgage payment will usually be higher than what you paid for rent, there are a number of tax benefits of owning a home that help reduce that difference.
• One of the major benefits of owning a Seattle home is that the interest you pay on your mortgage(s) is tax deductable up to a limit of one million dollars.
• You can deduct the interest on up to $100,000 of other debt that uses your home as security, for example, a home equity loan.
• The points you paid to reduce your mortgage interest rate are tax deductable in the first year. However, if you refinance, take a home equity loan, or a loan secured by a second home, the points are deducted over the life of the new loan.
• The money used to pay your annual property taxes can be claimed as an income tax deduction. This applies to both your principal home and any others you may own.
• And here’s the big one; if you are married, have lived in your home for two of the previous five years, then the first $500,000 of profit on your home is tax free. If you are single, the first $250,000 profit is tax-free. In all cases, there is an excise tax of approximately 2% that must be
