Saving Money When Buying a Home
Tax Benefits of Home Ownership
Provided by Tosh Lanquist - Realtor, Kelly Right Real Estate
There are many tax benefits to home ownership. If you currently own or if you are thinking about buying, make sure to investigate your State and Federal tax laws to understand what benefits you may qualify for. It could save you hundreds if not thousands of dollars every year.
Make Sure You Don't Overlook These Benefits!
Idaho's Home Owner's Exemption
If you own and occupy your primary residence, you may qualify for an exemption on a portion of the value of your home. To take advantage of this benefit, home owners need to apply with the County Assessor by April 15th of the current tax year. Though this year's deadline has come and gone, you should still apply. Once registered, the benefit will take effect next year and carry forward the years to come. The Idaho State Tax Commission provides more information on this. Additionally, visit the IRS' Home Owner FAQs.
Home Mortgage Payments
Interest paid on a mortgage, mortgage insurance premiums, and real estate property taxes are typically tied to your home mortgage payments. You can deduct qualified mortgage interest paid as well as the mortgage insurance premiums paid on a loan secured by your main home or second home. Additionally, you can deduct real estate property tax paid. This is an annual tax imposed by your local government for the value of real property. Visit the
IRS Publications to learn more.
Points paid
If you paid points when you secured your mortgage, you might be able to deduct this cost as home mortgage interest. Certain requirements must be met in order to take this tax deduction. For example, you may not be able to deduct all of the points paid if your acquisition debt is greater than $1 million or your home equity debt is more than $100,000. Learn more about
Home Mortgage Points from the IRS Website.
Capital Gains
You may qualify to exclude up to $250,000 (or $500,000 if filing jointly) of capital gains from the sale of your home. Some restrictions apply, including the requirement to have lived in the home for 2 of the last 5 years. If you meet all of the IRS' requirements, you could save tens of thousands of dollars in taxes. However, any loss from the sale of a home is not tax deductible. Learn more about these requirements by reading the Sale of Your Home on the IRS Website.
Also note, if you made improvements to the home before selling, make sure to keep your receipts for those improvements. Improvements that increase the value of the home, such as an addition or remodel, may be tax deductible.
Moving Expenses
Though not directly related to your home, this may be something to consider if you are deciding to sell and relocate to another area as a result of a job move. If your move is related to locating to a new job or your current work location has moved, you may be able to deduct your moving expenses. There is a 3 point test that must be met in order to qualify. 1.) The move must closely relate to the start of work, 2.) You meet the IRS' distance test, and 3.) you meet the IRS' time test. Read more about Moving Expenses from the IRS website.
It's important to follow with your tax advisor or accountant to better understand what you qualify for so that you are able to maximize your total deductions at tax time. Find out more by visiting your local state and government websites or your local county offices.
Here are the local County Assessor Offices in North Idaho:
Idaho State Tax Commission
Kootenai County Assessor: 451 North Government way, Coeur d'Alene, Idaho
Bonner County Assessor: 1500 Hwy 2, Suite 205, Sandpoint, Idaho
Look up other County Assessors Offices.
The information above is general advice. Before acting on this, you should consider the appropriateness of this information, your objectives, your financial situation and needs. For specific tax rules for the current tax year, please refer to the IRS.GOV website or consult a licensed tax professional.
