There may be many typical tax deductions for purchasing real estate. Deductions lower your taxable income and thus result in fewer taxes owed. It is important to learn the tax benefits before buying a property or if analyzing renting vs. buying. This blog post provides an explanation of typical tax deductions for purchasing real estate in Franklin TN.
Tax Deduction Eligibility
Not everyone may claim typical tax deductions for purchasing real estate in Franklin TN. When completing taxes, you can opt for the standard deduction or itemized deductions, whichever is more favorable. If you own a low priced property, the deductible costs may not add up to higher than the standard deduction. Other financial figures may factor in as well. An accountant can offer a better understanding of the tax advantages of buying a home by taking into account your personal situation.
Qualified Home Ownership Expenses
Just the interest part of your home loan payment is tax deductible. In the first few years of owning a home, you contribute more for interest than principal. Therefore, the amount of paid towards interest is higher when you first own a home than in later years. Your mortgage company will mail you a statement each year detailing the amount of interest.
Municipal taxes may also offer tax benefits. Municipal taxes are a yearly amount but may be due in quarterly statements. These taxes can be part of your mortgage payments, and file copies of the tax statements mailed directly to you. The total in mortgage statements may not include the total amount, particularly if you purchased the property during the year.
Lenders Mortgage Insurance
If you purchased your residence within a designated time frame and if you are within a qualifying income bracket, you might be able to deduct mortgage insurance fees. Mortgage insurance is commonly due at closing and on a recurring basis for mortgages higher than 80 percent of the home price and until the loan amount drops below a specific level.
You should retain a record of your closing statement. Some fees such as points, adjusted property taxes, and pre-paid interest can be used. Provide the paperwork to your accountant.
Typical Tax Deductions For Purchasing Real Estate In Franklin TN
The above typical tax deductions for purchasing real estate in Franklin TN applies to primary homes. If you bought investment real estate, the list of deductions vary. This information is shared solely as a generic overview. Always ask a tax professional for sound advice applicable to your financial situation.
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