Buying a home
There are many ways to adjust your bottom line when it comes to taxes. Usually they are related to the government’s attempt to incentivize you to do something and the advantages of homeownership is no different. Having everyone purchase a home does many great things for our economy and the government has an invested interest in pushing you in that direction. A reduction in taxes is how they focus you in that direction.
There are many reasons to own your home besides the tax advantages that will benefit your bottom line but sorry this a tax blog so…. below are a few of the top tax advantages to consider.
- Interest paid on your mortgage is tax-deductible! Unlike credit card interest or interest paid on a vehicle, mortgage interest is deductible and provides great benefits, especially at the beginning of the loan.
- Many home improvements can favorably adjust your tax basis and some energy efficiency upgrades can provide valuable tax credits! Tax credits are awesome! They reduce your tax bill dollar for dollar, making them far more valuable that adjustments to income.
- You may be able to deduct expenses for a home office! Even though it is possible to do in an apartment, it makes it much easier to deduct office expenses in a home. Say for instance, if you live in a 1 bedroom apartment. You’d be hard pressed to explain to the IRS where your office begins and your bedroom ends. For that reason, more times than not, the IRS would not accept this as viable. In a home, if you have an extra bedroom, you can set up a home office and can distinguish between your living quarters and your “office”.
Buying a home strictly because of the tax advantages shouldn’t be the only reason to buy but when comparing it to renting a similar space, those tax advantages go a long way to pushing you towards home ownership.