There can be several tax benefits of purchasing real estate. Deductions minimize your taxable income and thus lead to fewer taxes owed. It is helpful to learn the tax benefits when purchasing real estate or when comparing renting vs. owning. This article provides information on tax benefits of purchasing real estate in MA.
Tax Deduction Requirements
Not everyone may claim tax benefits of purchasing real estate in MA. When preparing taxes, you may use the standard deduction or itemized deductions, whichever is higher. If you own an inexpensive home, the deductible figures might not total higher than the standard deduction. Other personal figures may matter too. A tax consultant will give you a better understanding of the tax advantages of purchasing a home by reviewing your personal finances.
Qualified Property-Related Costs
Just the interest portion of your mortgage payment is tax deductible. In the early stages of property ownership, you get charged higher for interest than anything else. Thus, the amount of interest is a larger figure in that time period. Your mortgage company will send you a statement after the end of the year outlining the sum of interest paid.
Real Estate Taxes
Municipal taxes are also offer tax advantages. Property taxes are an annual calculation but are generally invoiced in quarterly statements. These taxes can be included in your mortgage monthly payment, but consider keeping records of the tax statements mailed directly to you. The total in mortgage statements may not be accurate, especially if you closed on the home mid-year.
Lenders Mortgage Insurance
If you purchased your residence within a certain period of time and if you are under a specified income range, you might be eligible to deduct mortgage insurance payments. MI is normally due at settlement and monthly for loans more than 80% of the purchase price and remains until the loan balance decreases to the 78 percent mark.
Items Paid at Closing
Be sure to keep the original of your settlement statement. Some fees such as points, property taxes, and pre-paid interest can be deductible. Furnish the paperwork to your tax consultant.
Tax Benefits Of Purchasing Real Estate In MA
The above tax benefits of purchasing real estate in MA refers to primary homes. If you purchased investment property, the possible deductions vary. This information is meant only as a basic overview. Always consult with a tax consultant for solid advice applicable to your financial situation.