Archive: Opinions

If you are among millions of first-time homebuyers in 2015 you are in for a nice surprise on your taxes. Homeownership comes with some impressive tax benefits. Depending on your situation, there may be thousands of dollars coming back your way.

Homeownership tax benefits demonstrate America's commitment and it recognizes that homeownership builds and strengthens families, neighborhoods and communities.

If you are renting, then you can't take advantage of those tax benefits. Renting definitely offers advantages, but if you are on the fence about buying a home, then these tax advantages just might be the incentive you need to purchase your dream home.  You can take advantage of deductions such as mortgage interest, property tax, and mortgage insurance.  If you are a home seller, then you benefit too if the capital gains are under $250,000.

The mortgage interest deduction
The mortgage interest deduction lets homeowners deduct the interest on home mortgage loans valued at $1 million or less. This deduction is especially helpful in the first few years of a mortgage, when the monthly payment goes largely toward interest.

Property taxes
Everyone knows that being a homeowner means paying taxes on your property to local government, whether that's the city, county or local school district.  What you might not know is that these taxes are entirely deductible from your federal income tax. That's good news for homeowners, and it's another tax advantage that renters don't enjoy.

Mortgage insurance premium deduction
Federal Housing Administration and others offer an attractive low-down-payment option, but FHA also requires the purchase of mortgage insurance on all loans. Sometimes with a conventional loan, if you put down less than 20%, a lender will also require mortgage insurance. The good news is that you can deduct mortgage insurance from your federal income taxes as an itemized deduction up to an adjusted gross income of $109,000 ($54,500 if married filing separately), provided other conditions are met. That's no small thing.

Home sellers
If you sell your property for more than you purchased it because you have made improvements or the market has improved, then the capital gains are free from federal income tax, up to $250,000 for individuals and $500,000 for joint filers. You can't say that about many other investments.

These are just four tax advantages, but there may be others.  For example, you may have added green features to your home, or if you may be eligible for depreciation allowances.

The biggest decision and the largest single investment many people will ever make is buying a home. Renting is not without perks, and each person needs to decide when the right time to buy is. Now you know that when that time comes, there is tax code to help you get there.

Norma Jayne
Ithaca, New York
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