There can be many home ownership tax deductions. Deductions lower your taxable income and therefore result in fewer taxes owed. It is important to understand the tax advantages when buying a property or when comparing renting vs. owning. This article offers details on home ownership tax deductions in MA.
Tax Deduction Factors
Not everybody is eligible for home ownership tax deductions in MA. When completing taxes, you can apply the standard deduction or itemized deductions, whichever results in less taxes. If you purchase an inexpensive property, the deductible expenses may not add up to higher than the standard deduction. Other financial figures could impact these figures as well. An accountant can offer a better understanding of the tax affects of owning a home by reviewing your personal situation.
Deductible Home Costs
Only the interest portion of your home loan payment is tax deductible. In the early stages of owning a home, you contribute more in interest than principal. As a result, the total deductible interest is more significant in those first few years. Your loan provider will mail you a statement each year totaling the total interest paid.
Real estate property taxes may also be tax deductible. Real estate taxes are an annual charge but are traditionally billed in quarterly statements. These taxes can be included in your mortgage payments, but retain copies of the tax statements sent directly to you. The figure in the statement by your mortgage company may not be accurate, especially if you purchased the home mid-year.
If you first purchased your residence within a certain time frame and if you are part of a specified income range, you may be able to deduct MI fees. MI is invoiced at settlement and on a recurring basis for loans more than 80 percent of the home value and continues until the loan balance drops below the 78 percent level.
Closing Related Fees
You should keep the original of your closing paperwork. A variety of charges such as points, adjusted real estate taxes, and pre-paid interest may be deductible. Furnish the documentation to your accountant.
Home Ownership Tax Deductions In MA
The above home ownership tax deductions in MA is relevant to primary residences. If you purchased investment real estate, the list of deductions differ. This information is meant solely as a generic introduction. Always speak with a tax professional for solid advice tailored to your personal profile or to your type of home.