Tax Week: Advantages of Home Ownership

With income taxes due less than a week away, we’re going to spend the next few days focusing the blog on some helpful tax tips.

Today, let’s look at a few ways owning a home can impact your income taxes this year.

home buyers

There are a number of areas on your taxes where being a home owner can help you save money. If you refer to IRS Publication 530, you will find information about tax benefits from Residential Energy Credits to specific items that can (mortgage interest, property taxes) and cannot (principle portion of mortgage payments) be deducted from your taxes.

Deducting Interest

For your primary residence (where you live), usually the entire portion of a mortgage payment that is for interest can be deducted if you itemize your deductions on Schedule A (Form 1040). However, your deduction may be limited if:

  • Your total mortgage balance is more than $1 million ($500,000 if married filing sepa­rately), or
  • You took out a mortgage for reasons otherthan to buy, build, or improve your home.

Please refer to IRS Publication 936 if either of these situations applies to you.

Selling A Home

If you sold a home in 2012, or plan on selling one in the future, IRS Publication 523 details all of the potential tax implications of that experience. There are a number of items included there that are significant.

There is a lot more to learn about home ownership’s impact on your taxes, including repayment of the first-time homebuyer credit, and you can refer to IRS.gov for some answers.

However, we strongly recommend consulting with a trusted tax advisor with any additional questions or concerns about how owning a home can impact your 2012 income tax returns.

Banco Popular North America, its parents, affiliates, subsidiaries, agents, or employees do not provide tax or legal advice. Please consult with your attorney, financial consultant/planner, accountant, and/or tax advisor for advice concerning your particular circumstances. The information contained in this Internet site is for general informational and educational purposes only and should not be construed as professional advice or a legal opinion on specific facts or circumstances. The information or opinions contained in this Internet site should not be construed by any consumer and/or prospective client as an offer to sell or the solicitation of an offer to buy any particular product or service. Links to other sites are for your convenience in locating related information and services.

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