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New Homeowners: 3 Tax Benefits Not to Miss

by Mercer Savings Bank / Wednesday, 17 January 2018 / Published in Taxes

Are you a new homeowner or ready to be a homeowner? Homeownership may seem financially scary, but there are a lot of benefits compared to renting. You can decorate or renovate your home any way you want, no more noisy neighbors who live above you and you can gain tax advantages.

Yes, tax breaks! There are tax advantages to homeownership. Don’t miss out on these three deductions that can put money back in your pocket.

3 Tax Advantages of Owning a Home

1. Mortgage Interest Tax Deduction

Mortgage interest is any interest you pay on a loan affixed to a primary or second home.

As a homeowner, you can itemize your deductions to reduce your taxable income by deducting any interest paid on your home mortgage. The deduction is limited to interest paid on up to $1 million (or $500,000 if you are married and filing separately).

2. Property Tax Exemptions

You may also be eligible for a tax break for the land that your home rests upon. Homeowners who itemize deductions can also reduce their taxable income by deducting property taxes.

One of the most commonly known property tax exemptions in Ohio is The Homestead Exemption, which allows low-income senior citizens and permanently and totally disabled Ohioans to reduce their property taxes. This exemption also benefits veterans who are rated as 100% disabled by the VA. These homeowners can be exempt up to $25,000 of the market value of their home from all local property taxes.

The exact savings of property tax exemptions vary depending on the location of the property.

3. Home Equity Loan Deduction

The interest paid on a home equity loan or line of credit used for renovations also may be deductible on your taxes, just as the interest paid on the primary loan take out to buy the home. This deduction has a limit of $100,000 (or $50,000 if you are married and filing separately). Note: Next year, for your 2018 taxes filed by the April 2019 deadline, this deduction will no longer be available.

It Pays to Own Your Home

Owning a home is a financial responsibility that has many advantages. Be sure to do your research on home ownership and talk to your tax advisor to determine your eligibility for home ownership tax deductions.

Let us help you determine if you are ready to own your own home. Fill out our mortgage application or visit a Mercer Savings Bank location near you.

Taxes are constantly changing. While this blog is meant to help you best manage your finances, it’s for informational purposes only and shouldn’t be seen as tax advice. Talk to your tax professional if you have questions about your taxes.

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About Mercer Savings Bank

Mercer Savings Bank has been a trusted community bank for more than 130 years. We offer financial products and services that make your life easier and where your money works harder for you. By opening an account, obtaining a loan, or planning your retirement with Mercer Savings Bank, you are part of a legacy of great customer service, integrity, and value.

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