Tax Benefits of Buying a Home

Tax Benefits of Buying a Home

Tax Deductions for Purchasing Properties In Texas

There can be many tax deductions for purchasing properties. Deductions reduce your taxable income and thus result in lower taxes owed. It is useful to learn the tax benefits before buying a property or when considering renting versus buying. This article provides an overview of tax deductions for purchasing properties in Texas. Always check with a Tax Professional for the most up-to-date advice.

Tax Deduction Eligibility

Not everyone will take advantage of tax deductions for purchasing properties in Texas. When preparing taxes, you can apply the standard deduction or itemize your deductions, whichever is more favorable. If you own an inexpensive property, the deductible items might not total higher than the standard deduction. Other financial figures can matter as well. An accountant can offer a true analysis of the tax benefits of purchasing a residence by taking into consideration your specific figures.

Deductible Home Ownership Expenses

Loan Interest

Only the interest part of your home loan payments are tax deductible. In the first few years of owning a home, you pay more in interest than principal. Therefore, the amount of paid towards interest is a larger figure in that timeframe. Your mortgage company will send you a statement after the end of the year summarizing the sum of interest paid.

Municipal Taxes

Real estate property taxes may also be tax deductible. Property taxes are an annual figure but are usually invoiced in quarterly time frames. These taxes can be included in your mortgage monthly payment, but retain copies of the tax bills sent to you. The amount in mortgage statements may not detail everything paid, particularly if you purchased the property during the year.

Mortgage Insurance

If you purchased your home within a certain period of time and if you are within a certain income bracket, you can possibly deduct mortgage insurance fees. MI is usually paid at closing and on a monthly basis for loans higher than 80 percent of the selling price and remains until the loan amount drops below a specific percentage.

Closing Costs

Be sure to retain the original of your closing paperwork. A variety of charges such as points, adjusted property taxes, and pre-paid interest may be important. Furnish the documentation to your accountant.

Tax Deductions for Purchasing Properties In Texas

The above tax deductions for purchasing properties in Texas is relevant to primary homes. If you bought investment real estate, the list of deductions will not be the same. The above is shared strictly as a general overview. Be sure to consult with a tax consultant for solid information applicable to your individual situation.

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