6 Tax Perks of Being a Homeowner

June 1, 2022


Happy entrepreneur woman in glasses counting profit on calculator at laptop

There are many benefits to being a homeowner. You get to put down roots, build wealth, and customize the property as you wish.

There are even advantages on your tax returns too.

It’s true: In many cases, homeownership can actually lower your tax burden (or even increase that refund).

Are you new to homeownership? Want to leverage the valuable tax benefits of your new status? Here are the perks you’ll want on your radar:

1. Mortgage interest deduction

Homeowners can deduct the interest paid on their mortgage loans, as well as some home equity loans and HELOCs, too — as long as you used those funds for home improvements.

Keep in mind, though: You can only deduct interest on up to $750,000 of mortgage debt or less (if you’re married and file your return jointly) or $375,000 (if you file your returns solo.)

2. Property tax deduction

You can also write off the property taxes you pay annually, which in some places, can reduce your tax burden considerably. The catch is you can only deduct up to $10,000 across all state and local taxes.

3. Discount points

If you just bought your house and you paid discount points to lower your mortgage rate, you can also write the costs of these off on your tax returns. These are considered a type of “mortgage interest” and fall under that deduction.

4. Home office costs

Do you work out of the home full-time or even just some of the time? If so, you may be able to deduct the costs of your home office. It just needs to be a designated space (for business use only), and you must use it regularly to qualify.

5. Mortgage insurance

You can also deduct your mortgage insurance costs, which you’ll have with FHA loans (all of them) and conventional mortgages if you put down less than 20%. Both upfront and monthly/annual mortgage insurance qualify.

6. Capital gains

This one isn’t so much a deduction as it is a tax break. If you sold a home before buying your new one, any profit you made — called capital gains — could be treated as tax-free income.

You’d just need to be living in the home as your primary residence for two of the last five years, and the gains would need to be $500,000 or less (married filing jointly) or $250,000 (filing solo).

Talk to a pro

It’s important to note that not all homeowners are eligible for all of these write-offs, and many require you to itemize your returns — which means forgoing the standard deduction. You’ll want to talk to a tax advisor to ensure you’re making the right decisions for your specific tax situation.

Want to learn more about the benefits of homeownership or explore buying a new property? Get in touch with a Premier Nationwide Lending office in your area today.

Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 6201 West Plano Parkway, Suite 100, Plano, TX 75093 | NTFN NMLS 75333.

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