Buying a new home for the first time is an exciting experience—knowing that it will be the setting of many happy future memories with your family and friends. It also allows you to invest in your own financial future, rather than contributing monthly earnings to the corporation that runs your apartment complex. However, in addition to these benefits, you can also take advantage of a variety of tax breaks.

How Does Buying a Home Change Your Taxes?

1. Tax Deductions

Tax deductions are monetary amounts that can be reduced from your annual income, lowering your total tax responsibility. When you own a home, you can deduct the mortgage interest and property interest, lowering the amount owed at the end of the year. Those who invest in a second can also deduct a portion of the mortgage interest they pay on that property. 

2. Tax Credits

Unlike deductions, a tax credit is money essentially refunded to you at the end of a year. For instance, if you are eligible for a tax credit of $1,000, that amount would be tacked on to whatever refund you were already entitled to. Homeowners are eligible for several—for example, you can receive some recompense for home improvements that benefit the environment. 

3. Home Profits 

Furthermore, if you buy a new home, live in it for a few years, and then sell it at a higher price, you won’t pay taxes on the bulk of those proceeds. Currently, the law states that if you’ve lived in the home for at least two of the five years before the sale, you won’t pay taxes on the first $250,000 of the profit you make. 

When you are ready to invest in a new home, consider working with SWE Homes in Houston, TX. With a large selection of properties, convenient financing options, and a layaway program, this trusted business makes it easy for families to transition into homeownership. Explore listings in the area by visiting their website, or give their team a call at (713) 413-1000 with questions.