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Now that we are fresh into the new year, we can’t forget that tax season is around the corner. The federal government encourages homeownership by offering tax incentives for homeowners. Here are two tax incentives you may be able to take advantage of:
Can I Claim the Homestead Exemption?
If your new property is your primary residence, then you may qualify for a homestead exemption. The exemption will reduce the assessed value of your property for tax purposes, so you’re taxed only on a portion of the value of your home.
In many cases, homestead exemptions are based on a percentage of value or a set amount, whichever is less. For example, if the tax assessor values your home at $250,000, but your exemption allows for the lesser of 10% of assessed value ($25,000 in this case) or $45,000, you will be taxed on a $225,000 value.
Homestead exemption statutes vary by state and even by the local jurisdiction. Exemptions typically are allowed to homeowners who were living in their homes as of January 1 of the tax year. Extra exemptions may be available for senior citizens, disabled veterans, and other groups. In many cases, you need to apply for the homestead exemption before an early spring deadline. The exemption often automatically renews in subsequent years.
Is Mortgage Interest Deductible?
Each year, we send our homeowners a mortgage interest statement that summarizes the amount of mortgage interest you paid in the previous year. This statement may or may not include potentially tax-deductible items relating to your mortgage. Therefore, we advise you to give a copy of both your settlement statement from the closing of your loan and your mortgage interest statement to your tax advisor.
How do you find out the specifics? Our mortgage professionals are here to help you feel more informed and empowered to make the best decisions for you and your family. For the more comprehensive answers, you can consult your tax advisor or your local tax assessor’s office.
Ready to start your journey toward homeownership? One step at a time, we will help you to build your budget, navigate the process, and apply for a loan.
Contact us today to start your journey toward homeownership.