The end of the year is a great time to become a first-time homeowner or close the sale on that
pending investment property, vacation home or future residence. As we close in on the final weeks
of the year, we offer three (3) reasons to enter the real estate market during the time of year most
people hibernate on available deals. If you are close to buying a home before the end of the year,
don’t miss out on these special perks.
- Save on Taxes
Closing the sale on a new home by December 31 means you can deduct some closing fees,
mortgage loan interest, property taxes and points on your home loan from your income tax return.
These deductions are significant, especially in the early years of your loan when most of your
mortgage goes towards paying off loan interest.
If you can afford it or need additional tax savings for the year, make an extra mortgage payment late
in December to count it toward your deductions — just be sure the check is in the mail with enough
time to be processed by your lender before the end of the year. In addition, take care of any repairs
before the end of the year to be fully deductible against income taxes.
Other Tax Credits and Deductions Available to Homeowners before December 31:
- Energy Efficiency Tax Credit
Homeowners who completed and paid for residential energy efficiency projects, are eligible
for a one-time credit of up to $500. The energy efficiency tax credit may apply to some types
of water heaters, furnaces, insulation, windows, roofs, heat pumps, boilers and air
conditioning units. - Home Office Deduction
Homeowners who use part of their home for business or in-home office may be able to
deduct expenses for the use of the home. The deduction is available to homeowners and
renters. Account for every home expense paid by the business (such as mortgage costs,
utilities and repair bills) or use a prescribed rate allowable by the square footage of the office
for a tax deduction.
Note: Beware of the lowering your taxable income too far as to become subject to the Alternative
Minimum Tax (AMT) which counteracts any savings from available itemized deductions and tax
saving vehicles.