Tax Return Depressing? Owning a Home Could Help

Many Americans got some depressing news this week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home.

According to the Tax Policy Center’s Briefing Book -“A citizen’s guide to the fascinating (though often complex) elements of the federal Tax System” – there are several tax advantages to homeownership.

Here are four items, and a quote on each, from the Briefing Book:

1. Mortgage Interest Deduction

“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

2. Property Tax Deduction

“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

3. Imputed Rent

“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”

4. Profits from Home Sales

“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”

Bottom Line

We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.

Disclaimer: Always check with your accountant to find out what tax advantages apply to you in your area. 

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106 W Wickieup Lane Phoenix, AZ 85027

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$500,000

3 Beds

2 Baths

1,764 SqFt

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Price Type --

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$500,000

2 Beds

2 Baths

1,800 SqFt

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$500,000

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1,883 SqFt

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ATTENTION TO ALL interested in such RARE LISTING as this phenomenal 4 BEDROOM, 3 ½ BATH, PRISTINE, BASEMENT TOWNHOME within WALKING DISTANCE of ASU! Four Parking spaces, including the SINGLE CAR GARAGE are a luxury in this area. This sweet property is nestled quietly in a quaint, little PRIVATE CUL-DE-SAC flanked with stately paver-driveways, shaded by the canopy of mature trees and lush foliage. The Interiors are flooded with sunlight from the abundant windows illuminating the FRESH NEW CARPET & PAD, FRESH INTERIOR DESIGNER PAINT, the NEW TOILETS & CONNECTIONS and the LOFTY, LOOMING CEILINGS with Tile in all the Right Places. FRENCH DOORS, SPLIT-OAK STAIR-RAILINGS, BUILT-IN CAN LIGHTING, the METAL ROOF, and almost a PRIVATE BATH PER OCCUPANT are coveted UPGRADES. The efficient GALLEY KITCHEN boasts QUARTZ COUNTERS, STAINLESS SINK with GOOSE NECK FAUCET and some STAINLESS APPLIANCES. This is a MOVE-IN READY property with the REFRIGERATOR, WASHER & DRYER CONVEYING. Three bedrooms & 2 Baths are Second Level. The Great Room, Dining, ½ Bath and Kitchen are Main Floor and the Basement with Bedroom, Full Bath and Laundry offers the option of either a GAME ROOM or OFFICE. EXTRAS include a GARAGE DOOR OPENER & EPOXY FLOOR, INTERIOR SPRINKLERS for Fire Protection, LARGE CLOSETS and an EXTERIOR FRONT PATIO and MASTER BALCONY. ITS PRIME LOCATION near ASU, Tempe Beach Park, Shopping, Restaurants and Freeways: 101, US60, 202 and I-10 make this property a GEM not to be missed!

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1838 N Mitchell Street Phoenix, AZ 85006

$500,000

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$500,000

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$500,000

3 Beds

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1,631 SqFt

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$500,000

4 Beds

2 Baths

2,720 SqFt

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Property Type Single Family Residence

Price Type --

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$500,000

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$500,000

4 Beds

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Status Active

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Property Type Single Family Residence

Price Type --

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16254 W Tuscany Way Surprise, AZ 85374

$500,000

2 Beds

2 Baths

2,035 SqFt

Status Active

MLS # 6664856

Property Type Single Family Residence

Price Type --

Welcome to this beautifully updated single level golf course home in the highly desirable community of Sun City Grand. As you enter the home you are greeted with a wall of windows framing the beautiful golf course views, an open floor plan with fresh neutral colors and rich travertine style tile. The over sized master bedroom boasts bay windows, a huge walk in closet and recently remodeled bathroom with granite countertops and walk in shower. Venture down the hallway to the chef's kitchen with Island, granite countertops, stainless steel appliances that all look out to the warm and inviting family room with stacked stone gas fireplace. Whether you would like the privacy of your quaint front patio or the wide open views on your back patio of the 17th tee box of the Desert Springs Golf Course, this home provides you the canvas to enjoy the amazing outdoor living that Arizona has to offer! Welcome to your next Home Sweet Home!

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