Most people — even those among the so-called millennial generation — would like to own property at some point in their lives. Since it relates to both our drive for prosperity as well as our abundance of space, there is something about real estate ownership which gives off a thoroughly American impression. As Americans, material success has always been among our primary concerns, and home ownership is a clear indication of such success. What’s more, home ownership also has symbolic value as it represents stability. And in a land of such frenzied activity having a sense of stability can be a source of great pleasure.
What not all Americans realize, however, is that real estate ownership offers a number of important tax benefits which are unavailable to renters. And among those who have some sense of the benefits of home ownership very few are aware of exactly how advantageous these benefits can be. As it turns out, there is a whole range of perks available to those who own property. Property owners who take advantage of these perks can save a great deal of money.
For instance, property owners are able to deduct a number of items on Schedule A of their personal 1040. Individuals are able to deduct mortgage interest (on the first $1 million of home acquisition debt and the first $100,000 of home improvement debt), qualified mortgage insurance, real estate taxes, and the points paid when purchasing or refinancing. Individuals who sell their home may be able to exclude up to $250,000 ($500,000 if married and filing jointly) provided they meet the requirements of the Principal Residence Exclusion.
People who own rental property are able to take deductions for a variety of expenses which they may incur throughout the course of ownership. Advertising, cleaning bills, utilities (when the rental property does not have a tenant or when utilities are included in rental price), mortgage interest, homeowners insurance and property taxes are all deductible. Repairs to rental property are deductible as well, while improvements to rental subject must be capitalized and then depreciated over their useful life.
There are many other benefits which may be derived from real estate ownership. For more information, view the resources from our webcast here.
Image credit: StockMonkeys.com
Check out this video to learn more