Let's not forget that there are a lot of benefits to owning a home. In fact, when you're renting, it's 100% interest. So even though we might be reading that interest rates are going up and we know they are going up, let's not forget that there's a tax benefit to owning a home.

Now, I just want to be clear, I am not a tax specialist. I work with a lot of people and accountants that I can refer you to, but I just wanted to touch base on some of the tax benefits of owning a home because sometimes we forget.

Discount Points

So if you're buying a home and you decide you want to lower your interest rate and you do buy down your loan and you do pay a percentage, like 1 point to buy down your loan, that mortgage point is fully tax deductible.

Mortgage Interest

So benefit number two is that you can deduct your interest up to $750,000 in a mortgage. So when you're itemizing your taxes and you have a loan up to $750,000, that means your mortgage interest is fully tax deductible. Again, you need to itemize your return and you need to work with your accountant, I'm just giving you some guidelines on some things that you can take on your taxes. Again, home ownership is a great benefit.

Property Taxes

Property tax deduction. Everybody's paying property taxes, right? So on your federal return, you can take up to $10,000 as a deduction on your property taxes. So again, it's a nice benefit, although you're making a payment, you do get a deduction on your taxes.

Necessary Home Improvements

There are a lot of tax credits. So let's talk about... you want to go in and you want to do some upgrades in the home. You potentially want to redo your windows. You want to make it more energy efficient. You want to put some solar panels on. You want to change the insulation. The government is actually rewarding you for making the home more efficient, and they're going to give you a tax deduction for doing some of those things. You've got a pool. You want to upgrade your pool motor. There are some benefits to spending some money to make it more efficient.

First-Time Buyer Grant

Now, if you're a first-time home buyer and you've got a 401k, the government is actually encouraging you to help you with your down payment. In fact, you can withdraw $10,000 with absolutely no penalty if you're using it for a down payment.

Bottom Line

So I know you're reading a lot of headlines about interest rates going up and you might be nervous if you're a first-time home buyer, but I don't want you to forget that interest is 100% when you're renting because you're paying somebody else's mortgage. So even though we're hearing interest rates at 5 or 6%, that's actually much cheaper than 100% interest, and let's not forget some of these great key points on tax deduction. Talk to your CPA and let’s connect soon!