Buying a home has its advantages
December 20, 2005
Home Connection.BY THE COLORADO ASSOCIATION OF REALTORSQuestion: What are the tax benefits of buying a home?
Answer: 1.) Owning a home increases your savings. Mortgage payments help build your net worth. Unlike rent payments, a portion of the money you pay goes toward building equity (i.e. the difference between the market value of a house and the amount still owed on the mortgage). As you pay off the mortgage, you owe less on the home and “own” a larger share of it.Another advantage is that the equity you build over the years can help qualify you for other loans, such as college and car loans.
2.) Mortgage interest payments are deductible By owning a home, you can write off the interest on your mortgage on your tax return. In many cases, this will take you above the minimum itemized deductible, allowing you to write off many other items. 3.) Additional tax benefits
The tax code is generous to homeowners. Not only can you deduct the interest on your home mortgage, but you can avoid taxes on the profit from selling your home if you buy another home of equal or greater value within two years of the sale. Also, IRS rules allow you to avoid taxes on up to $250,000 (or $500,000 if you are married and filing jointly) of profit from the sale of your home.It is very important to point out that real estate deductions, taxes and mortgage interest deductions, are the only ones left fully intact by Congress.This column, brought to you by the COLORADO ASSOCIATON OF REALTORS, is meant as general information. Consult your local Realtor regarding specifics about home buying or selling. Please submit your question to Tyrone Adams, 309 Inverness Way South, Englewood, Colorado, USA 80112-5818 or contact firstname.lastname@example.org.