You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any others you may own. Any money held in escrow to pay future taxes, however, is not deductible.
- Mortgage Interest
One of the biggest incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to a limit of $1 million.
- Tax Free Profits
Another major advantage of home ownership is that, in most cases, you don’t have to pay taxes on any profit you make when you sell your home. The law allows you to exclude from taxes up to $250,000 in profit from the sale of your principal home -- $500,000 for a couple who file jointly. This exclusion also covers the sale of a parcel of land adjacent to your house, unless it’s used for business.
- Moving Costs
The government allows you to write off many of your moving costs when you buy a new home if it’s at least 50 miles closer to your job than your old home.
Of course, because tax rules vary based on income and other factors, be sure to consult an accountant or financial advisor about your particular situation.
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