What are the tax benefits of owning a home?

Owning a home can provide numerous benefits, including tax advantages. If you own a home in Houston, Texas, you may be eligible for various tax benefits. Here are some of the tax benefits of owning a home in Houston, Texas.

Property Tax Deduction

Property taxes are an inevitable expense for homeowners, but they can also be a valuable tax deduction. In Houston, property taxes are levied by the county and various local taxing entities. As a homeowner, you can deduct the property taxes you pay on your federal income tax return, subject to certain limitations. This deduction can be particularly valuable for homeowners in Texas, where property taxes can be relatively high.

Mortgage Interest Deduction

Another valuable tax benefit of owning a home in Houston, Texas, is the mortgage interest deduction. This deduction allows homeowners to deduct the interest they pay on their mortgage from their federal income tax return. The deduction is available for up to $750,000 of mortgage debt for homes purchased after December 15, 2017. For homes purchased before that date, the deduction is available for up to $1 million of mortgage debt.

Home Equity Loan Interest Deduction

If you take out a home equity loan or line of credit, you may also be able to deduct the interest you pay on your federal income tax return. The deduction is available for up to $100,000 of home equity debt, regardless of when the debt was incurred. However, the debt must be used to buy, build, or improve the home that secures the loan.

Capital Gains Exclusion

If you sell your primary residence, you may be able to exclude up to $250,000 of capital gains from your federal income tax return ($500,000 for married couples filing jointly). To qualify for the exclusion, you must have owned and used the home as your primary residence for at least two of the five years before the sale.

Energy Efficiency Tax Credits

If you make energy-efficient improvements to your home, you may be eligible for tax credits. These credits can help offset the cost of the improvements and reduce your tax liability. Some of the eligible improvements include installing energy-efficient windows, doors, insulation, and roofing.

In conclusion, owning a home in Houston, Texas, can provide various tax benefits, including property tax deduction, mortgage interest deduction, home equity loan interest deduction, capital gains exclusion, and energy efficiency tax credits. To ensure you take advantage of all the tax benefits available to you as a homeowner, consult with a tax professional or accountant.