Tax Advantages Countrywide Financial - $0.00

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Countrywide Financial

Tax Advantages

One great advantage to owning a home are the potential tax benefits. For over 75 years, the U.S. government has given significant tax breaks to homeowners. Most states permit the same deductions. For specific information on how home ownership will affect your taxes, be sure to ask your tax advisor.

In most cases, for your primary residence
you can deduct: Interest on your home loan
Property taxes
Discount Points

These expenses are deducted from gross income before calculating the taxes owed. So if you pay $12,000 a year in home equity loan interest, you deduct $12,000 from your gross income. That's $12,000 less of your income that can be taxed if you already itemize deductions. Which can make a huge difference in your tax bill. (Figures cited are for example only.)

Some important points to consider:

The tax benefit is particularly attractive during the early years of the loan because a higher proportion of your early payments go to paying interest and that's precisely what's deductible.

You can take these tax deductions only if you itemize your deductions (rather than using the standard deduction).

You'll get a tax break as well on any appreciation in value when you sell your home. Individuals can net up to $250,000 ($500,000 for a married couple) in tax-free profit when they sell their home. (Restrictions apply, so ask your tax advisor.)

Home expenses that typically aren't tax-deductible: Home improvement expenses (other than interest on a home improvement loan)
Closing costs, except for prorated property taxes and discount points
Real estate commissions
Home inspection, appraisal or loan application fees
Homeowner and co-op dues
Homeowners, flood and other insurance costs
Mortgage insurance (unless you take advantage of Countrywide's Tax Advantage Mortgage Insurance)