The document discusses the tax benefits of homeownership. It outlines several tax deductions homeowners can claim, including mortgage interest deduction, property tax deduction, and exemption of capital gains from profits of selling a primary residence of up to $250,000 for individuals or $500,000 for married couples. However, some expenses like home insurance, HOA fees, and additional principal payments are not tax deductible. The document provides information on these deductions and non-deductions to help homeowners understand how to maximize tax savings.

1. MAKER
C APITAL GROUP
T Tax
The T Benefits of Home O
Ownership
O
wning your own home is at the foundation of the famous “American Dream,” but paying taxes is more
the American nightmare. Luckily, homeownership can help you send less to the IRS and keep more
money in your pocket this year.
Although the benefits of homeownership are vast, the tax benefits associated with purchasing and owning
a home are oftentimes overlooked. Who would think that borrowing money to purchase a home could come
with so many advantages on April 15th? These benefits include deductibles such as mortgage interest, home
equity debt, real estate taxes and others. It is important for all homeowners to know exactly what benefits the
can reap! Read on to find out some basics on keeping more and sending less to Uncle Sam this year.
What about mortgage interest? What about Taxes?
• Biggest tax break is mortgage interest. • The other major deduction is property taxes
• ALL interest is deductible, unless the loan is greater than • Property taxes will continue to be an annual deduction as long
$1,000,000. as you own your home.
• Additional tax breaks come to those who did any of the **Note: Property taxes must be deducted as an itemized
following: expense on Schedule A.
1) Cash-out Refinance
2) Home Equity Loan or Line of Credit Are you moving up to a bigger house?
**Note: Usually equity debts of less than $100,000 are • If you make a profit when you sell your home, you can avoid some taxes.
FULLY deductible.
• Law changes from 1997 allow a gain of up to $250,000 ($500,000
• Have a second home? for married joint filers) to be TAX-FREE.
• In many cases, mortgage interest is also fully deductible **Note: In order to receive this tax benefit, you must have owned
on second homes! the property for 2 years and lived in it for 2 of the 5 years prior to
the sale.
What is NOT deductible?
• Insurance • Property Hazard Insurance
• PMI- Private Mortgage Insurance • Unfortunately, Hazard insurance is Nondeductible for ALL.
• Unless you meet requirements of a certain PMI law, you • Other nondeductible residential expenses
wonʼt be able to deduct your Private Mortgage Insurance. • HOA dues
• HOWEVER- If your loan was/is originated or refinanced • Additional principal payments
between January 1, 2007 and December 31, 2011 and • Home depreciation
meets certain loan amount limits, you might be able to • General closing costs
deduct your PMI payments. • Local assessments to increase value of your neighborhood.
JAMES (J.D.) COBB
Partner | Branch Manager An Ameripro Funding Company, Mortgage Banker #43954
Company NMLS#: 131699 | Individual NMLS#: 269510
2307 Lake Austin Blvd.Austin, Texas 78703 This information is not to be considered tax advise. Please consult a tax advisor
Cell - 512.557.8582 regarding any and all income tax questions and decisions
James@makercapitalaustin.com Bell, K. (2011, January 11). Home sweet homeowner tax breaks. Retrieved from http://www.
bankrate.com/finance/taxes/home-sweet-homeowner-tax-breaks-2.aspx