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4 Ways New Homeowners Can Save on Their Taxes

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4 Ways New Homeowners Can Save on Their Taxes

For new homeowners, settling in can come with challenges. After inspections, meetings, and plenty of paperwork the last thing you may feel ready for is understanding your new tax breaks. However, buying a home comes with plenty of benefits. Here are a few ways that homeowners can capitalize this tax season.

 

  • Early IRA Withdrawal: For many new homeowners, securing the initial down payment can be the first hurdle in their real estate journey. If you’re a first-time home buyer and have an IRA, or Roth IRA, the IRS will allow you to withdraw up to $10,000, penalty-free, to aid in the cost of your new residence.

 

  • Valuable Deductions: Between your mortgage interest, mortgage insurance, and real estate taxes, your home deductions could make a big dent in your taxable income. When gathering your tax documents as a new homeowner, be sure to include any mortgage documents, and escrow account information, to gain the full benefit of the deductions.

 

  • Energy Efficient Tax Credits: Did you install a geothermal system or make any other energy efficient improvements to your home such as windows, doors or insulation? If so, you may be eligible for helpful credit to reduce your tax bill.

 

  • Tax-Free Profit on Sale: When you go to sell your home, the IRS allows you to avoid the capital gains tax on the profits you generate from the sale. This means that if your home’s value goes up in the two or more years you live there, you may be able to exclude up to $250,000 (or $500,000 for joint filers) of the gain realized in the sale of your principal residence.

 

Buying a home is a major step in your financial life. By utilizing these essential tax breaks, you can reap the benefits of your newest and biggest purchase. For more help, Hogan-Hansen has a team of professional financial consultants and certified public accountants to help you every step of the way. Contact us today to find out how we can work for you.

LEGAL DISCLAIMER: The information presented on this blog should not be construed as legal, tax, accounting or any other professional advice or service. You should consult with a professional advisor familiar with your particular factual situation for advice concerning specific tax or other matters before making any decision. 

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