Tax Benefits of Owning a Home
Tax Benefits of Owning a Home
Deducting mortgage interest
In most cases, you can fully deduct your mortgage interest secured by your primary or secondary home. Beginning in 1987, mortgage interest to buy, build, or improve your home (acquisition debt) up to $1,000,000 or home equity loans up to $100,000 became tax deductible.
Points (also known as origination fees or discount points)
Generally, points paid to obtain a loan on your home or to reduce the interest rate can be fully deducted in the first year. You also have an option to deduct this amount over the life of the loan.
Points paid to refinance a mortgage are generally not fully deductible in the year you pay them. However, if you use a portion of refinanced loan proceeds to improve your primary home, you can fully deduct the part of points related to the improvement in the year paid. The reminder of the points can be deducted over the life of the loan.
If you have been deducting your points over the life of your mortgage and it ends due to a payment in full or refinancing, do not forget to deduct the remaining amount of points in the year the mortgage ends.
Property taxes
Property taxes paid on real estate that your own are also tax-deductible.
These deductions can be claimed on Schedule A (Itemized deductions) of your tax return.
- You can also deduct late payment charges, mortgage prepayment penalty and moving expenses.
- Some expenses that are not tax deductible are: HOA fees, title, mortgage or hazard insurance, the principle part of your mortgage, or appraisal and inspection fees.
Tax-free profits
When you sell your primary residence, you can exclude the entire gain up to $500,000 for couples who file jointly or up to $250,000 for single filers. In order to qualify, you have to meet the ownership and use test (you must have lived there for at least two of the previous five years as your primary residence). You can only claim this exemption once every two years. Extenuating circumstances such as health, change in place of employment or a qualified unforeseen occurrence may allow you to claim a partial exemption if this period is less than two years.
Please consult your tax, legal, or investment advisor when making financial decisions. For additional information please visit http://www.irs.gov/pub/irs-pdf/p936.pdf.
—————————————————————————————————————————————————————————————————————
We hope you found this article about “Tax Benefits of Owning a Home” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Heroes and Horses: Brave Challenge to Veteran Care Status Quo
Introduction: In this interview, Alan Olsen, CPA and featured guest Micah Fink discuss how Horses and Heroes use horses to aid veteran care and much more. Transcript: Alan Olsen Welcome to American Dreams. My guest today is Micah Fink, CEO and founder of Heroes and Horses. Micah, welcome to today’s show. Micah Fink Alan, thank…
Balancing IPOs, Ledgers & Fatherhood, A Moment with Travis Combs
Introduction: Two dad’s discussing life balance in the hectic world of IPOs with featured guest, Travis Combs, Managing Director at the Effectus Group. In this interview, Alan Olsen, CPA, MBA and Travis address family, faith, career, client’s best interest, and trying to strike a balance. Transcript: Alan Olsen Welcome to American Dreams. My guest today is…
A Deep Dive into Investment Banking and Philanthropy with Michael Bennett
Introduction: A candid discussion about investment banking and philanthropy with Mike Bennett, Managing Partner of Crewe Capital. In this interview, Alan Olsen, CPA, MBA and Mr. Bennett open a window into his Crewe Capital‘s early beginnings the connection between investment banking and philanthropy. Transcript: Alan Olsen 0:01 Welcome to American Dreams. My guest today is…
Teaching Business Success with Dr. Frumi Rachel Barr
Introduction (teaching business success at Barr Business School) In this interview, Alan Olsen, CPA, MBA discusses teaching business success with Dr. Frumi Rachel Barr. Dr. Frumi Rachel Barr is the Founder and Chief Mentor at the Barr Business School. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is…