If you have been renting a house for several years and have enough money saved up to buy a home, you may want to contact a real estate agent to begin
You can write off mortgage interest
One of the key benefits you will have when purchasing a home with a loan is the ability to write off the interest you pay on the loan. The nice part about this benefit is that you can take this deduction every year. To take the deduction, you will have to itemize your deductions on your tax return. When you do this and add in your mortgage interest, it will most likely place you in a category that exceeds the standard deduction amount allowed by the IRS.
You can write off any points you paid
After buying your house, you will also most likely have the ability to write off the points you paid on your loan. This too is something that will be considered an itemized deduction, and it will also help reduce your tax liability. You will only be able to take this deduction once, though; it is not a recurring deduction you can use each year.
As you are considering the loan you will take to buy your new house, you may want to take into consideration how points would affect your loan. Generally, paying for one point on a home loan will give you an interest rate that is 0.25% lower than the current rate; however, each point will probably cost 1% of the mortgage loan amount. This can be a good idea for a person that has a lot of money to put down on a mortgage. It can also be beneficial for a person that plans to stay living in a home for a very long time.
You can probably write off your private mortgage insurance payments
Private mortgage insurance (PMI) is something that you will be required to pay if you borrow more than 80% of your home's value. This insurance will be billed to you each month with your mortgage payment, and you will probably be able to write this off on your taxes each year. There are several rules about this, but most people qualify for this deduction.
If you are getting ready to buy a home, you may be more encouraged to do so after learning about the benefits this event will offer to you on your taxes. To start looking for the right home, contact a real estate agent today. To find out more, speak with a business like Gavigan Homes.