Tax write-offs for homeowners
Happy tax day. It’s April 15, and hopefully, everyone has survived another tax year. By now most people have submitted their paperwork to the IRS, written their checks and are pretty confident they won’t being going to jail any time soon.
For those of us who are property owners, tax time can actually have its up side.
Although purchasing a home may not be the most popular topic of conversation right now, there are still a multitude of benefits to homeownerships, not the least of which are tax write-offs.
The federal government has been giving away a lot of money recently, but the most popular government give away has already been in effect for a very long time. The ability for a homeowner to deduct mortgage interest and property taxes annually has always been one of the major motivators for purchasing property. Just because we’re in the middle of a real estate crisis doesn’t change the fact that owning property is the best way average people have to reduce their annual tax liability. If you take the time to figure out the amount of tax you would be responsible for if you didn’t have the advantage of a mortgage interest and property tax write off, I guarantee you’ll feel a lot better about owning a home, even in this market.
Mortgage interest and property taxes can be claimed on individual’s tax returns for both primary and secondary homes. Investment properties have even higher write off guidelines, including property maintenance costs and depreciation, however, the IRS has detailed rules in place outlining exactly how investment properties are viewed. Since everyone’s tax position is different based on income, age and dependents, a qualified tax specialist should be consulted before decisions are made to purchase property, especially investment property.
Of course, owning property has benefits beyond being a way to shelter taxes. Paying off a mortgage builds equity since monthly you buy down the principal loan amount. Even if your property never appreciates, you are still increasing the value of your property every time you make a mortgage payment.
In addition, paying a mortgage on time on a regular basis is the best way to achieve and maintain a good credit rating, enabling you to qualify for other types of credit. And despite what has happened during the past two years, owing a home is still the American dream for most people representing freedom and family stability.
Let’s also not forget the "A" word – appreciation. I predict that some day in the not too distant future, we will see home values start to rise out of the ash heap of sub-prime mortgages and Wall Street traders. Anyone who has the desire and ability to buy property should get real about buying now. It can never be said enough that prices are at an all time low, mortgage rates are also at an all time low, the stock market can’t make up its mind which direction it wants to go in and our little Island is one of the most attractive in the country.
Well now that your taxes are filed and you’re convinced that owning a home is better than not owning one you’re probably wondering what to do next. Let’s see. There must be something to get ready for before next tax season. Oh, now I remember – hurricane season – something else like taxes that can’t be avoided.
