Becoming a homeowner introduces the possibility of reaping tax benefits tied to homeownership. Buying a home for sale in Boise, Idaho will bring several mortgage-related aspects of tax savings that could potentially be tax deductible, and it's important to explore each one to determine how they apply to your specific circumstances:
Real Estate (Property) Taxes
Local and county taxing authorities assess real estate taxes annually to fund public services. These taxes may be eligible for deduction on your income tax return. For precise information on how to leverage this deduction, it's recommended to consult your tax advisor. Generally, homeowners can anticipate annual property taxes amounting to about 1-3% of their home's market value.
Mortgage Points
If you made the choice to pay mortgage points upfront in exchange for a lower interest rate, there might be tax implications to consider. If the points were applied towards the purchase of your primary residence, they could potentially be deductible for the year in which they were paid. In the case of refinancing your mortgage, the deduction could extend over the life of the mortgage. For assistance in assessing whether paying for points is advantageous in your scenario, our points calculator can provide valuable insights.
Mortgage Interest Payments
In certain scenarios, the interest payments you make on your mortgage might qualify for a tax deduction. The specifics of this deduction can vary, so it's a good idea to consult your tax advisor or reach out to the IRS for detailed guidance. Typically, mortgage lenders furnish an annual report detailing the interest paid on your qualified mortgage using IRS Form 1098 (Mortgage Interest Statement).
Lower Income Homeowners
If your state designates you as a low-to-moderate income homeowner, you could be eligible for mortgage interest tax credits that cover a portion of the interest paid by the state on your behalf. To avail this benefit, you would need to secure a "mortgage credit certificate" from your state or local government before finalizing your mortgage agreement. To gain a clear understanding of the eligibility criteria and the functioning of these credits, it's recommended to establish contact with your local government agency.
Final Thoughts
Understanding and maximizing these potential tax benefits requires careful consideration and consultation with professionals who specialize in taxation. Your personal tax advisor, in particular, can provide tailored guidance based on your financial context, ensuring that you make informed decisions about your mortgage-related tax deductions.
Related: Most Common Mistakes Homebuyers Make
King & Edge Real Estate in Boise, Idaho
As experienced Boise real estate agents, we are honored to have the opportunity to serve you and be a part of your real estate journey. Let us guide you towards a successful and rewarding experience, where your goals become our goals, and your vision becomes a reality. Contact us today and discover the unparalleled service and expertise that sets King & Edge Real Estate apart as we help you sell your home in Boise or find your place to call home.
