Tax Season And The Benefits Of Owning A Home

Well it's that time of year again. You should start receiving your 2011 W-2s from your employer, if you haven't already. Some people schedule an appointment to see their CPA as quickly as possible in anticipation of a refund, which begs the question, "What did I do with that money last year?" Well, if you're not a home owner, why not put that money to good use? You can use your refund to help with a down payment. If you qualify for an FHA loan, your down payment requirement is only 3.5% of the purchase price. Also FHA allows the seller to pay for your closing costs, up to 6%.

With rates as low as they are, your mortgage payment may end up being less than what you currently pay in rent. Here are some other tax benefits of owning a home:

Mortgage Interest Deduction

One of the biggest incentives for owning a home is that the interest you pay on your mortgage is tax-deductible, up to a limit of $1 million. This deduction, like most other tax breaks for homeowners, applies to any kind of home, possibly including a second home.

Property Tax Deduction

You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any other home you may own. Any money held in escrow to pay future taxes, however, is not deductible.

Moving Expenses Deduction

The government allows you to write off many of your moving costs when you buy a new home, if it is at least 50 miles closer to your job than your old home. To qualify, you must continue to work full-time in the general area of your job for 39 weeks during the following year. If you’re self-employed and work in your home, any move of 50 miles or more will make your moving expenses deductible. However, you must also work full-time near the new location for 78 weeks during the next 24 months. 

Of course, because tax rules vary based on income and other factors, be sure to consult an accountant or financial advisor about your particular situation.

Chad Bernard is the Branch Manager at Primary Residential Mortgage, Inc. in Avon, OH