Buying a home not only affects your bank account, but it can also affect filing your taxes. There are several tax deductions that might be available once you have a home mortgage. Check out some of the best ways to save money on your taxes.
- Mortgage Interest and Points should be tax deductible once you have a home mortgage. Your lender should send you a form 1098 in January and will list the amount of interest you paid the previous year. If you paid points to get a loan and the points are typical for your area, you should be able to deduct these points as interest. This amount should be included on your form 1098.
- Real Estate Taxes are also tax deductible. Whether you pay your taxes through your escrow account with the lender, or you pay real estate taxes on your home mortgage yourself, you need to keep track of the amount. If taxes are paid through your lender, the amount should show up on your form 1098. If you pay the taxes yourself, locate your check stubs and use this to determine the amount to include when filing your taxes.
- Penalty-free IRA Tax Withdrawal up to $10,000. If you need money for your down payment to buy a home, you can withdraw money from your IRA, no matter your age, without paying a penalty for early withdrawal. You are considered a first-time home buyer if you haven’t owned a home in the last 2 years. You can also use your IRA to buy a home for your children, parents, or even grandparents.
Taking advantage of these tax deductions can make a home mortgage payment even more affordable. Owning a home is a huge responsibility and a great way to build equity and create stability for your family. When you are ready to begin thinking about buying a home, contact Starboard Financial to answer all of your questions about obtaining a home loan and how it will impact your taxes.