Buying a home is a sound investment in your future, providing a place to call your own and an asset that will grow in value. A real estate purchase also delivers tax benefits that could save you thousands of dollars when tax preparation season arrives.

3 Tax Advantages of Buying a Home

1. Mortgage Interest Deduction

The interest on your mortgage can total thousands of dollars per year, especially in the early years of the loan. Current tax laws allow homeowners to write off interest on mortgages of up to $750,000, along with interest on home equity lines of credit used for home improvements.

2. Property Tax Deduction

Paying property taxes is one downside of owning a home, but the tax code provides some relief by making those payments deductible. While the 2017 tax overhaul limited this deduction to $10,000, combined with state and local income taxes, it can still lower your liability by thousands of dollars.

3. Deduction for PMI Payments

Unless you put down a down payment of at least 20%, you’ll likely have to pay private mortgage insurance (PMI). Fortunately, the tax code allows homeowners with annual incomes of less than $50,000 or married couples making less than $100,000 to deduct these payments.

However, this deduction is subject to review every year, so check with a tax preparation professional before writing off your PMI payments.

Tax preparation can be confusing and frustrating, especially after you’ve made a major investment in a home. Since 1999, Tudor Wilson & Associates CPAs, LLC, has provided detailed advice and comprehensive service to Honolulu, HI, homeowners, ensuring they receive every deduction to which they’re entitled. Visit the accounting firm’s website for more information on their tax preparation services, and call (808) 592-2000 to make an appointment today.