Owning a home comes with many benefits, especially when it comes to your taxes. It’s especially true for anyone thinking about buying their first home.
Let me start by saying that I’m not a tax professional, but I’ve sold my fair share of homes, and I’m pretty proficient in this area.
For starters, when you sell your principal residence, you can claim up to $250,000 tax-free as a single person. Married couples can claim up to $500,000 tax-free. This is a huge bonus that allows you to take advantage of appreciation over time.
However, the biggest advantage is mortgage interest and real estate tax deductions. Say you owned a $600,000 property that you put down 20% on with a 4.25% interest rate. You’d pay $20,244 in interest the first year, which you can write off against your income. If you’re in the 33% tax bracket, the actual savings amount to $6,680, or $556 a month. That’s an advantage you don’t get as a renter.
If you’re an investor interested in taking advantage of the 1031 exchange before it’s gone, I’d love to sit down and speak with you about the potential tax benefits you could utilize.
If you have any other questions about the tax benefits of owning a home or you’re thinking about buying your first home here in the D.C. area, give me call or send me an email. I’m here to help.