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Tax Saving Tips with Home Ownership 2021

Did you know that buying a house is more than just a fun, cool place to live? In this video, I’m going to walk you through the tax advantages and other great benefits of owning a home. I’ll explain why buying a house is the best investment you can make for your future.

Tax Benefits Of Home Ownership

Have you ever had a CPA, your parents, or your grandma repeatedly tell you to buy a house? One of the reasons they’re giving you this advice is because they understand the tax benefits of owning a home versus renting.

The very first tax benefit that you need to know is that 100% of the interest on your primary residence loan is 100% tax-deductible. Let me show you how this works.

Let’s say Larry makes $150,000 a year. Over the last 12 months, he’s paid $15,000 of interest on his loan. This means that Larry will be taxed at $135,000 income versus $150,000. Why? He can write that $15,000 worth of interest that he paid off, making his taxable income reduced by $15,000.

Interest is not the only thing that is tax-deductible. Larry also paid $8,000 in property taxes that he was also able to write off. That $135,000 taxable income will then go down by another $8,000. In this example, Larry’s taxable income went from $150,000 down to $127,000, saving him a boatload of money just by being a homeowner.

Making The Most Of Your Investment

At the end of the year, your lender is going to give you a summary statement that shows the amount of interest you paid on your loan. It’s up to you to either take that to your CPA and make sure they file it for you or save money and do it yourself. Either way, it’s important if you want to get your taxable income way down.

Additionally, the year that you purchased your home probably has other tax deductions. There may be several other items that you can give to your accountant—or file yourself if you’re that good—that’ll ensure you get a further reduction in your taxable income. Make sure you take those to your CPA.

Your largest tax advantage when owning real estate is capital gains. If you live in your home for two years or more, you get up to $250,000 capital gains, tax-free, as an individual. If you’re a married couple, you get up to $500,000 capital gains. Those are excellent reasons to be a homeowner.

Is It Time For You To Buy?

Buying a house is exciting—and part of that excitement is tax savings. I hope this helped you understand some of the great tax savings that are associated with owning a home. If you have any questions about any of these advantages, please give me a call at (619) 925-2322. You can also email me, too, and remember: I’m here as your resource and happy to help!