Homeownership offers a multitude of benefits that extend beyond the comfort and pride of having a place to call your own. Notably, property ownership can also open the door to a variety of financial benefits, most notably in the form of different tax breaks offered to homeowners. In this article, we’ll take a closer look at how homeownership enables you to take advantage of income tax relief, and how you can maximize the benefits of these special tax breaks.

1. Taking Advantage of Homeownership Benefits

• Homeownership comes with a variety of benefits that you can take advantage of.
• One of the primary benefits of owning a home is the ability to build equity. Over time, the value of the home increases and the owner accumulates money that can be put towards future investments.
• Another great benefit of homeownership is a tax break. Mortgage interest payments are tax deductible, meaning that you can claim a portion of the interest you pay each year on your taxes.

Financial Stability

Owning a home gives you the freedom to make your own decisions about remodeling and renovations. You can also enjoy a sense of financial stability, as you are no longer concerned about rental hikes or other sudden increases in housing costs.

Privacy

For many people, homeownership means having more privacy and flexibility than you would if you were renting. When you own a home, you don’t have to worry about your landlord’s rules or restrictions. You can create home improvements and changes that you want—whether they be aesthetic or functional—with a little bit of creativity and time.

Maintenance

One of the best things about owning a home is that you don’t have to worry about dealing with the maintenance that comes with renting. You can call in professionals to repair and maintain things without the worry of adding on an additional cost on top of the rent. You are in charge of the upkeep of the house, so you can make sure that everything runs smoothly and you are able to keep up with the care of the property.

2. Unlock Tax Breaks for Homeowners

As a homeowner, you could unlock valuable tax benefits and deductions. Knowing where to look and claiming what you are eligible for could pay off—literally!

• Mortgage Interest

Every year, homeowners can deduct all the interest they pay on a mortgage for their primary residence from their taxes. This includes mortgage interest paid on loans used to purchase or improve your home. The deduction applies to both fixed and adjustable-rate mortgages.

• Mortgage Points

If you have paid mortgage discount points, you can often take a tax deduction in the year you paid them. One point is equal to one percent of your total loan amount. Points make your payments lower, so you save during the life of the mortgage, and you may also receive a tax break.

• Private Mortgage Insurance (PMI)

If you’ve secured a loan for more than 80% of your new home’s value, you may be required to pay for private mortgage insurance. This insurance offers protection for the lender, while also offering a bonus for the buyer. Many lenders will even allow you to add the premium for this insurance to your loan in order to receive the tax benefit.

3. Maximize Your Tax Benefits as a Homeowner

One of the great benefits of becoming a homeowner is all the tax savings you can gain. From the mortgage interest you pay each month to the amount of property taxes you deduct, there are several ways to maximize the tax benefits of homeownership.

Utilize Homeowner Deduction

You may be eligible to deduct the mortgage interest you pay on your primary residence or a second home. This deduction is also available for both fixed and adjustable rate mortgages. In addition, property taxes are also deductible. Make sure to save your mortgage and property tax payment receipts.

Take Advantage of Closing Cost Credits

When you purchase a home or refinance a mortgage loan, you may be eligible to receive a closing cost credit. These credits can be taken when you file your taxes, which can reduce the amount of taxes you owe. Common credits include:

• Points for prepaid interest
• Mortgage insurance premiums
• Origination fees
• Appraisal fees

Make Home Improvements

Making certain home improvements can help you maximize your tax benefits. Home improvements such as energy-efficient upgrades may qualify you for a tax credit. These credits can help offset the initial cost of making these upgrades. It’s important to keep all of your receipts at least three years. This way, if you are audited, you will have the proper documents to provide.

4. Make Your Homeownership Investment Work Harder for You

Buying a house can be a major investment. From mortgages to maintenance, it’s important to make sure you’re taking advantage of everything your investment can offer. Here are four tips for making your homeownership work harder for you:

• Take Advantage of Tax Benefits – Look into homeownership tax deductions, credits, and other benefits you’re eligible for so you can get the most back for your investment.
• Use “Smart” Home Technology – Use energy-saving tools in your home to save electricity and water, making it more efficient in the long run.
• Make Strategic Renovations – Look into ways to add value to your home – whether it’s through new appliances or even just a fresh coat of paint.
• Prioritize the Essentials – Take time to prioritize the essentials — keeping your roof and HVAC system in good shape is the best investment to protect your investment.

One great way to ensure that your home works harder for you is to join a home maintenance plan. Outsourcing regular maintenance and repair tasks eliminates the hassle, saves you time, and can even help to increase the value of your home in the long run.

In addition to maintenance and home upgrades, it pays to shop around for the best deals on insurance and mortgage rates. There are a number of tools and resources available online to help you compare and save.

Making the most of homeownership is about more than just keeping up with the bills. By staying on top of items like regular maintenance and shopping around for the best deals, you can make your homeownership go the extra mile.

Congratulations! You now possess the knowledge to take advantage of the many benefits of being a homeowner. Don’t forget to take proper advantage of the wonderful tax break opportunities as well. Taking this important step toward homeownership is sure to put you on the path for long-term financial success. Happy house-hunting!