There are many valid reasons why clients are interested in buying a home. Those could be to start a family, more space, the perfect school district, a desire to be closer to family, or to achieve that good ole American Dream. As you help them along the purchasing journey, don’t forget to share that there are also tax benefits to buying a home if they are itemizing their tax deductions. Let’s lay a few out for you.
- The biggest benefit of homeownership is the mortgage interest deduction that allows you to deduct the interest you pay on your mortgage. This is typically the largest tax deduction you can take. The buyer may also be able to deduct mortgage points paid at closing. This is generally paid over the life of the loan; however, if you meet a series of tests outlined by the Internal Revenue Service, a client may be able to deduct the full amount of points in the year paid.
- A homeowner may also benefit from deducting state and local property tax. This is limited to $10,000 for single and married filing jointly and $5,000 for married couples filing separately.
- If your client (or you as a REALTOR®) work from home or have a home-based business, the client may qualify for the home office deduction as well. Be sure to set up your home office properly so you meet the set standards to qualify.
For much more tax information for homeowners, reference the IRS Publication 530 on Tax Information for Homeowners. This will surely come in handy for you and your clients.
Click here to access IRS Publication 530.