THE TAX BENEFITS OF BEING A HOMEOWNER
When purchasing or selling a home, one should consider the many tax benefits. Buying a home is usually the biggest investments a person will ever make. Due to various tax benefits put in place by the government to encourage consumers to purchase homes, buying a home could be a very wise decision. In order to better understand these benefits, it is important to consult with an accountant or financial adviser.
One of the largest tax benefits is the deduction of mortgage interest. The interest paid on a primary residence can often be deducted if the consumer ops to itemize deductions on their Federal Income Tax Return. The consumer could potentially claim a deduction for any interest they have paid on mortgages for building, purchasing a home, or even a mortgage taken out for home improvements, as long as the house secures the mortgage.
PROPERTY TAXES AND HOMEOWNERS INSURANCE
In addition to mortgage interest, property taxes and homeowners insurance are also tax deductible. Private Mortgage Insurance (or PMI) is also deductible. However, VA Loans never have PMI.
THE VA FUNDING FEE IS TAX DEDUCTIBLE
The VA does not charge PMI, but they do often charge a one-time funding fee between 1.25 – 3.3%, that is often added to the loan. This fee is a one-time tax deduction. Disabled veterans who receive compensation for their disability are VA funding fee exempt.
CLOSING COSTS AND DEDUCTING POINTS
When tax season approaches, after a consumer has purchased a home, they may be confused about settlement charges when filing their income tax returns. When a consumer takes on a mortgage to buy a house, or refinance their current home loan, there will be some closing costs that will come up. Typically, these are compromised of fees to process the sale, check the title, have the property appraised, and drafting of the contract and the record of the sale.
All of this can seem overwhelming, especially if a consumer is a first time home buyer. Regardless, it is best to discuss any questions or concerns with a reputable tax specialist.
BUT BAH IS NOT TAXED, CAN I STILL WRITE ALL THIS OFF ON MY TAXES???
Yes you can! BAH and BAS are not taxed, yet you can still buy a home AND enjoy these tax benefits. That’s a double deduction and can really make purchasing a home an attractive choice.
The Chapman VA Loan Team at HomeBridge Financial is honored to help many veterans utilize their VA home loan benefit each and every year. Our goal is to provide the best customer service in the industry along with the most competitive rates and fees.
Now licensed in CA, AZ, NV, HI, WA, TX, GA, VA, MI, OR, FL, KS and N.C.
Semper Fi, Dan Chapman CAPT, USMC (vet)
ChapmanTeam@HomeBridge.com Call (760) 456-7139
About the author: Dan Chapman is the branch manager at HomeBridge Financial Services in Carlsbad, CA. He is ranked as the #1 VA loan officer at HomeBridge Financial (out of 700) and is ranked in top 30 in the entire United States in VA loan origination year after year. Dan is a Naval Academy graduate, served as a Captain (O-3) in the Marine Corps, and is an Operation Iraqi Freedom veteran. He has been focused on helping active duty military and veterans attain the dream of home ownership since 2007. He is actively involved in several local veteran causes and performs VA loan seminars throughout greater San Diego on a monthly basis. For a free consultation, please contact us anytime.