Homeownership comes with a wonderful host of benefits. But did you know that it can also save you money on your taxes?
According to the National Association of Realtors, numerous deductions and credits are available for homeowners. These include capital gains and mortgage interest deductions, as well as credits for energy-efficienct upgrades.
To get the latest information on energy credits for this year's tax return, visit EnergyStar.gov. You may be able to deduct portions of improvements on everything from windows and doors to water heaters.
Why do homeowners get such special treatment? For starters, the NAR reports that "home owners pay 80-90 percent of all U.S. federal income taxes."
And the credits and deductions don't just benefit wealthy homeowners.
Ninety-one percent of home owners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year. (NAR)
NAR President Ron Phipps says that homeownership has many positive impacts. "Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in home ownership, for the future of our families and our nation.”
Need some tips for this tax season? Take a trip over to houselogic.com, a free source of information from NAR, for the latest tips.
Carla Hill Realty Times March 16, 2011