There are plenty of financial benefits for buying a home, as opposed to renting one. On top of being able to build equity off of your mortgage, instead of tossing money at rent every month, there are also plenty of tax benefits that serve as incentives to spur the rate of homeownership in this country. Here are some home-related tax deductions that you might be able take advantage of…
Interest on various loans
First of all, you can actually get a write off on the amount of interest that you paid back on a variety of home-related loans. This includes being able to write off the interest on your mortgage payments, a home equity loan, and a home improvement loan, among others. This makes it more financially feasible to do things like access the equity that is backed up in your home, as well as improve your property with a home improvement loan.
Depending on the city or state where you reside, you might need to pay for real estate taxes, which are otherwise known as property taxes. Some states don’t require real estate taxes, but a vast majority of them do. The good news is that the property taxes you pay for your home are deductible from your income taxes. The deduction from your income taxes in your city and state are also matched with a deduction on your federal taxes.
If you, like many Americans, use your home as the base of operations for a small side business, then there are deductions that can be used if you count your home as a home office. Not only does this mean that a portion of payments towards the home are tax deductible, but also repairs and insurance costs, as well as depreciation, go towards those deductions.