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.
What’s Your Home Worth?
Search for Your New Home
21499 N Elba Road Maricopa, AZ 85138
$477,332
3
Beds
2.5
Baths
2,400
SqFt
Status
Active
MLS #
6682246
Property Type
Single Family Residence
Price Type
--
The heart of this ranch floor plan is an open layout with a great room, a breakfast nook and a gourmet kitchen with a walk-in pantry and a center island. The owner's suite is adjacent, and showcases a generous walk-in closet and an attached bath with double sinks and a deluxe shower. A private study with French doors, two bedrooms, a full bathroom, and a powder room round out the interior of the residence. A 3-car tandem garage and covered patio are also included!
25315 W Bowker Street Buckeye, AZ 85326
$477,210
4
Beds
3.5
Baths
2,712
SqFt
Status
Active
MLS #
6694685
Property Type
Single Family Residence
Price Type
--
BEAUTIFUL home ready in Sep/Oct! This home has ALL the space you need!! Need a 4th bedroom with own full bath and walk-in closet downstairs?! Flex room downstairs and half bath for guests too!! Upstairs loft is huge! Large closets! This home has electrical upgrades, soft water loop, and it's a Smart Home! Gorgeous interior with lots of off white/light gray 18''x18'' tile. Stone gray cabinets with hardware, 4''x12'' backsplash and quartz countertops! Wait until you see the oversized kitchen island with breakfast bar and single bowl sink. Three car garage with service door, Smart door opener and keyless entry. Great curb appeal. This home is EVERYTHING!!!
2648 E Marcos Drive Casa Grande, AZ 85194
$477,000
2
Beds
2.5
Baths
1,911
SqFt
Status
Active
MLS #
6681551
Property Type
Single Family Residence
Price Type
--
Indulge in the allure of the desert from your private oasis by the pool, with views of the scenic golf course. Inside, admire the custom tile, rock wall, plantation shutters, and abundant natural light. This home boasts 2 beds, 2.5 baths, a den, & an ext garage. Enjoy culinary experiences in the exquisite kitchen, featuring granite countertops, island, pendant lighting, RO, SS appliances, & staggered cabinetry w/pullouts. Unwind in the luxurious primary owner's suite, boasting a lavish en-suite with dual sink vanity, marble counters, a walk-in shower, & closet. A 2nd master suite offers its own private bath. Outside, enjoy resort-style living with a fenced yard, extended paver patio, and a 4-foot deep saltwater play pool complete with a rock waterfall and spa lounge area.
2882 N 155th Drive Goodyear, AZ 85395
$477,000
2
Beds
2
Baths
1,445
SqFt
Status
Active
MLS #
6684854
Property Type
Single Family Residence
Price Type
--
Beautiful Augusta model features a renovated kitchen with granite counters and upgraded appliances. Hardwood floors and tile floors throughout, no carpet to clean! Great room boasts media wall with a cozy built-in fireplace. Aluma wood awning covers this huge patio overlooking the golf course. The picturesque views of the golf course and mountains can be enjoyed from all main living areas. Additional upgrades include a built-in BBQ, sunscreens, plantation shutters, security front entrance door and stone exterior. Both bathrooms renovated with the latest design trends. This move-in ready home is the perfect winter get-a-way that you've been looking for!
4002 N 113th Avenue Avondale, AZ 85392
$477,000
3
Beds
2
Baths
1,798
SqFt
Status
Active
MLS #
6665765
Property Type
Single Family Residence
Price Type
--
Welcome to your new oasis in Avondale, AZ! This stunning 3 bed, 2 bath home boasts luxury and comfort at every turn. The expansive travertine patio leads you to a sparkling pool, perfect for entertaining or unwinding after a long day. Inside, you'll find a marble fireplace that adds elegance and warmth to the space. Upgraded light fixtures illuminate the open concept layout, showcasing the beautiful tile flooring throughout. The gourmet kitchen boasts top-of-the-line appliances and ample counter space for all your cooking needs. With 1798 sq ft of living space, this home offers comfort and style at every turn. Don't miss out on the opportunity to make this your forever home in Avondale!
22608 W Mohawk Lane Surprise, AZ 85387
New
$476,375
4
Beds
3
Baths
2,511
SqFt
Status
Active
MLS #
6696912
Property Type
Single Family Residence
Price Type
--
Introducing the latest addition to Surprise, is Frontera in Mesquite Mountain Ranch. Available now is this new detached single-level home, situated on a corner next to a park, this charming one-story residence features four bedrooms, two and a half bathrooms, and a two-car garage. Boasting front yard landscaping, granite countertops, a generously sized kitchen island with a single bowl sink, tile flooring, stainless steel appliances, and a gas range, this home is designed for modern living. It also comes equipped with a smart home package, a gas tankless hot water heater, and Deako smart light switches for added convenience. Residents of Frontera, will have access to an array of community amenities, including hiking and biking trails, pickleball and basketball courts and play areas.
7123 Pair O Dice Road Show Low, AZ 85901
$476,000
3
Beds
2
Baths
1,404
SqFt
Status
Active
MLS #
6573232
Property Type
Single Family Residence
Price Type
--
Beautifully remodeled 3 bed 2 bath home in the ideal location of Linden. Close to Show Low, shopping and restaurants, but with country living! This home has been lovingly remodeled this year with new flooring, a brand-new kitchen, fresh paint from floor to ceiling, a new roof and so much more! Take advantage of the beautiful yards, garden space, outside pavilion, fire pit and so much more! This home has indoor and outdoor space to entertain through all 4 seasons! Seller is directly related to the listing agent.
2027 W Monte Vista Road Phoenix, AZ 85009
$476,000
3
Beds
2
Baths
1,849
SqFt
Status
Active
MLS #
6688921
Property Type
Single Family Residence
Price Type
--
Welcome Home to Monte Vista! This recent remodel is nestled near the serene Encanto Park and golf course, this spacious abode stands out as one of the largest in the neighborhood. A unique feature includes an additional attached room with a separate entry, offering versatility as an extra bedroom, workshop, or private office. Revel in the comfort of new windows throughout the home, ensuring energy efficiency and aesthetic appeal. Don't miss out on this rare opportunity to own a beautifully renovated home with endless possibilities.
17761 W Running Deer Trail Surprise, AZ 85387
$475,995
4
Beds
3
Baths
2,090
SqFt
Status
Active
MLS #
6679433
Property Type
Single Family Residence
Price Type
--
This 4 bed/3 bath with en suite Emerald model shines as brightly as its namesake. An airy, open layout showcases the kitchen, dining room and the great room which leads to the covered patio via double slider center-meet door. This plan is a great option for multi-generational living with the en suite, featuring a living room and a private bed, bath wet bar and lounge area. Included features such as an inviting covered entry, a well-appointed kitchen offering 42'' cabinets, quartz countertops, stainless-steel appliances, a roomy pantry and a center island; an elegant dining room; a spacious great room; an impressive primary suite showcasing a nice shower with bench, generous walk-in closet and a private bath with cultured marble countertops; a convenient laundry; a covered patio and a 3-car garage. This home also features 9 ft ceilings, 8'6 paneled interior doors, additional windows, ceiling fan prewiring and beautiful tile flooring in select areas. Located in the fantastic community of Desert Oasis features parks, playgrounds and a community pool. This beautiful home is done right and has so much to offer! COME CHECK OUT THIS GEM TODAY!!!
16083 W El Cortez Place Surprise, AZ 85387
$475,990
4
Beds
2
Baths
2,139
SqFt
Status
Active
MLS #
6607688
Property Type
Single Family Residence
Price Type
--
Brand new, energy-efficient home available NOW! This single-story features a split floorplan with the primary suite tucked away in the back of the home. Umber cabinets with white/grey granite countertops, wood-look tile flooring with multi-tone carpet in our Elemental package. Paloma Creek is now pre-selling in Surprise. Residents will enjoy floorplans that feature flex spaces, 5 bedroom layouts and covered back patios. There's fun for the whole family at the community clubhouse, pool, outdoor kitchen, and fitness center. Each energy-efficient home comes standard with features that allow your whole family to live better and breathe easier too.* Visit Paloma Creek today. Each of our homes is built with innovative, energy-efficient features designed to help you enjoy more savings.
16076 W El Cortez Place Surprise, AZ 85387
$475,990
4
Beds
2
Baths
2,139
SqFt
Status
Active
MLS #
6669090
Property Type
Single Family Residence
Price Type
--
Brand new, energy-efficient home ready NOW! This single-story features a split floorplan with the primary suite tucked away in the back of the home. White cabinets with white granite countertops, and greyish brown carpet in our Distinct package. Five brand new designer-decorated models now open at Paloma Creek. Future residents will enjoy floorplans featuring covered back patios, private primary suites and ample storage. There's fun for the whole family at the community clubhouse, pool, outdoor kitchen, and future fitness center. Each energy-efficient home comes standard with features that allow your whole family to live better and breathe easier too.* Visit Paloma Creek today. Each of our homes is built with innovative, energy-efficient features.
17643 W Pueblo Avenue Goodyear, AZ 85338
$475,990
4
Beds
3
Baths
2,309
SqFt
Status
Active
MLS #
6667883
Property Type
Single Family Residence
Price Type
--
''Up to 3% of Base Price or total purchase price, whichever is less, is available through preferred lender.'' The Cantania floor plan encompasses four bedrooms, a soft water plumbing loop, and an 8-foot garage door height, highlighting some of its key structural elements. Noteworthy features of this home include a chef kitchen layout with a wall oven, microwave, cooktop, and vent hood, as well as quartz kitchen counters. The kitchen is equipped with a gas stub, and the den features double doors. The home comes complete with a washer, dryer, refrigerator, and window blinds. This home is scheduled for completion April/May.