Purchasing your first home is likely going to be one of the proudest moments of your life. It used to be that young people would purchase their home as soon as they graduated high school or before getting married. With the economy in its current state, many people arenâ€™t able to purchase their first home until much later in life. Knowing some of the tax benefits that are available to home owners can really help to reduce the overall cost of homeownership, as well as helping you recoup the savings you used as your initial down payment. This will help put more money in your pocket to plan a move.
So what are the best tax benefits for homeowners? While your local area may have some benefits that are unique, there are a few that are available nationwide. Knowing these tips will help you plan your finances more intelligently.
First, you can deduct mortgage interest from your taxes. The first few years of your mortgage will result in payments that are composed more of interest than principal payments. This means that the bulk of your mortgage, over the first few years, is tax deductable. With a typical mortgage, you will be able to write off up to 70% (sometimes more) of the total payments made over the first year. This could easily result in thousands of dollars that can be written off from your taxes, reducing your overall tax burden.
To further this concept, consider consolidating all of your existing debts into your home loan. Some banks will provide the option to add credit cards and vehicle loans to your total mortgage. Talk to your bank about this before you get any great ideas, though. The concept is great when it works. You will reduce your overall monthly payments, lower the interest amounts you are paying on those credit card and auto loans, and you will then be able to write them off on your taxes.