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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7710 E Gainey Ranch Road Unit 157 Scottsdale, AZ 85258

New

$675,000

2 Beds

2.5 Baths

1,203 SqFt

Status Active

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$675,000

4 Beds

3 Baths

1,414 SqFt

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MLS # 6655794

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$675,000

2 Beds

2 Baths

1,987 SqFt

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$675,000

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8027 W Northview Avenue Glendale, AZ 85303

$675,000

5 Beds

3.5 Baths

3,240 SqFt

Status Active

MLS # 6708412

Property Type Single Family Residence

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$675,000

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2.5 Baths

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7308 E Solano Drive Scottsdale, AZ 85250

$675,000

3 Beds

2 Baths

2,457 SqFt

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Property Type Single Family Residence

Price Type --

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20329 E Bronco Drive Queen Creek, AZ 85142

$675,000

5 Beds

3 Baths

2,778 SqFt

Status Active

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Property Type Single Family Residence

Price Type --

Gorgeous custom home in the sought after Horse community of Will Rogers Equestrian Ranch.This 5 bedroom, 3 bath + an office has a large great room with a split floor plan. The Kitchen has new appliances and sink with a generous island, that can fit the whole family. The freshly painted interior has two primary bedrooms with en suites. The other three bedrooms are spacious and inviting. The laundry room is large with built in shelves for storage. Not only does the home have a 3 car garage, it also has a new RV gate. Two new A/C units were installed in March. This unique community boast an equestrian center with 4 stall barns,4 turn out pens, 2 round pens and 2 250X150 arenas and a Community pool, sport courts and instant access to QC wash trails. Community RV and boat storage too!!

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$675,000

5 Beds

3 Baths

2,102 SqFt

Status Active

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Property Type Single Family Residence

Price Type --

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6628 N 19th Street Phoenix, AZ 85016

$675,000

3 Beds

2 Baths

1,675 SqFt

Status Active

MLS # 6743889

Property Type Single Family Residence

Price Type --

Welcome to your dream home! This beautifully remodeled residence is a gem in the highly coveted North Phoenix area. Featuring an open-concept design, this home is bathed in natural light, highlighting the light-toned luxurious LVP wood flooring throughout. The open-concept kitchen is decked out with stainless steel appliances and brand new luxury granite countertops. This home has been upgraded with new plumbing, new electrical, a new septic tank, and completely remodeled bathrooms, ensuring modern convenience and peace of mind. The back yard is ready for your personal touch, whether that be a pool, or a garden! The detached garage could be used for parking, extra storage or even converted into a casita! Conveniently located close to the 51 freeway, the Biltmore shopping center, high-end restaurants and more. this home provides easy access to all that Phoenix has to offer while maintaining a serene, residential atmosphere. Don't miss your chance to own a piece of North Phoenix living at its finest!

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1487 Mcculloch Boulevard Lake Havasu City, AZ 86406

$675,000

3 Beds

2 Baths

1,846 SqFt

Status Active

MLS # 6734829

Property Type Single Family Residence

Price Type --

Southside home with epic sunsets, lake & mountain VIEWS. Custom landscaping, water features, covered patio & elevated concrete patio area for the Havasu outdoor living lifestyle. RV/Boat garage, additional gated RV side-yard parking with hookups. Entire garage has heating/cooling for year-round comfort. Abundant amounts of natural light fill this home. Open concept living area, dining area and kitchen. Primary suite covers one side of the home with dual vanity, oversized jacuzzi tub, oversized walk in shower and walk in closet. Split bedroom plan . Kitchen has granite counters & dark wood cabinetry . Bathrooms have custom tile throughout. New tile flooring throughout provides worry free living with pets or kids. Vaulted ceilings, skip trowel wall finishes, One owner home since new.

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6642 E School House Flats Hereford, AZ 85615

$675,000

4 Beds

3.5 Baths

3,042 SqFt

Status Active

MLS # 6743531

Property Type Single Family Residence

Price Type --

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