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Tax Advantages
One great advantage to owning a home are the potential tax benefits. For over
75 years, the U.S. government has given significant tax breaks to homeowners.
Most states permit the same deductions. For specific information on how home
ownership will affect your taxes, be sure to ask your tax advisor.
In most cases, for your primary residence
you can deduct:
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Interest on your home loan |
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Property taxes |
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Discount Points |
These expenses are deducted from
gross income before calculating the taxes owed. So if you pay $12,000 a
year in home loan interest and property taxes, you deduct $12,000 from your
gross income. That's $12,000 less of your income that can be taxed if you
already itemize deductions. Which can make a huge difference in your tax bill.
(Figures cited are for example only.)
 | | Fixed rate loans are a good choice if you: |
| | | | | The tax benefit is particularly attractive during the early years of a loan because a higher proportion of your early payments go to paying interest and that's precisely what's deductible. |
| | | You can take these tax deductions only if you itemize your deductions (rather than using the standard deduction). |
| | | You'll get a tax break as well on any appreciation in value when you sell your home. Individuals can net up to $250,000 ($500,000 for a married couple) in tax-free profit when they sell their home. (Restrictions apply, so ask your tax advisor.) |
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Home expenses that typically
aren't tax-deductible:
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Home improvement expenses (other than interest on a home improvement loan) |
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Closing costs, except for prorated property taxes and discount points |
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Real estate commissions |
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Home inspection, appraisal or loan application fees |
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Homeowner and co-op dues |
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Homeowners, flood and other insurance costs |
For complete details on how deductibility of home loan interest and other expenses will affect your specific tax situation, ask your tax advisor. Or review a copy of IRS
Publication 936, Home Mortgage Interest Deduction. Or you can call 1-800-TAX-FORM (1-800-829-3676) to order a free copy.
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Equal Housing Lenders. © 2008 Countrywide Bank, FSB, Countrywide Home Loans Division. Member FDIC. Trade/service marks are the property of Countrywide Financial Corporation, Countrywide Bank, FSB, or their respective affiliates and/or its subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved.