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The Impact that Buying a Home Can Have on Your Taxes New Homeowner in Amherst, NH Begins Looking Ahead to the End of the Year

Written by Paul Belfiore on . Posted in Blog, Taxes.

Buying a home is one of the biggest financial decisions you’ll ever make. Beyond the excitement of this tremendous purchase, homeownership also makes available important tax deductions that can impact your overall tax bill. The tax advantages of homeownership can go a long way to reducing your overall bill at the end of the year. Mortgage interest deduction, property tax deduction, and points paid at closing can all significantly reduce the amount of money you pay in taxes.

A resident in Amherst had just purchased his first home. He was excited to begin this journey into homeownership and had many questions. One of these was whether there would be any tax implications regarding purchasing a home. Looking for information, he contacted the team at Merrimack Tax Associates.

Tax Deductions Available for Homeowners

One of the biggest tax advantages of homeownership is the mortgage interest deduction. If you itemize your deductions, you may be able to deduct the interest paid on your mortgage over the course of the year. For many homeowners, this can be one of the largest deductions they take each year. The IRS allows homeowners to deduct state and local property taxes, up to a combined limit of $10,000 for joint filers per year or $5,000 for those single filers. This deduction can help offset the cost of owning a home, particularly in areas with high property taxes.

The Importance of Maintaining Good Record to Take Advantage of These Deductions

While these tax breaks can add up, they’re only as valuable as the records you keep. It is important to save your closing documents, mortgage statements, and receipts for home improvements projects (these ongoing projects will reduce your capital gains tax when you sell the property in the future). Having thorough documentation makes it easier to claim deductions and ensures you don’t miss out on potential savings.

It is important to understand the tax deductions that buying a home can offer you. The new homeowner in Amherst was pleased to learn purchasing a home would now make him eligible for even more potential tax deductions. With this information, he will be ready to save when he goes to file his taxes at the end of the year.