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How New Homeowners Can Save this Tax Season

Posted on: in [ Home Buying Process, Tax Breaks ]

How New Homeowners Can Save this Tax Season

For new homeowners, settling in is an exciting step of purchasing a house. However, long after each picture is hung and boxes are stored away, your new investment can continue to pay dividends. To make the most of your purchase, Northeast Iowa Regional Board of REALTORS® offers these key ways that homeowners can capitalize this tax season.

  • Early IRA Withdrawal: For many new homeowners, securing the initial down payment can be the first hurdle in their real estate journey. If you’re a first-time homebuyer and have an IRA, or Roth IRA, the IRS will allow you to withdraw up to $10,000, penalty-free, to aid in the cost of your new residence.

 

  • Valuable Deductions: Between your mortgage interest, mortgage insurance, and real estate taxes, your home deductions could make a big dent in your taxable income. When gathering your tax documents as a new homeowner, be sure to include any mortgage documents, and escrow account information, to gain the full benefit of the deductions.

 

  • Energy Efficient Tax Credits: Did you install a geothermal system or make any other energy efficient improvements to your home such as windows, doors or insulations? If so, you may be eligible for helpful credit to reduce your tax bill.

 

  • Tax-Free Profit on Sale: When you go to sell your home, the IRS allows you to avoid the capital gains tax on the profits you generate from the sale. This means that if your home’s value goes up in the two or more years you live there, you may be able to exclude up to $250,000 (or $500,000 for joint filers) of the gain realized in the sale of your principal residence.

 

Buying a home is a major step in your financial life. By utilizing these essential tax breaks, you can reap the benefits of your newest and biggest purchase. If you are looking to secure the home of your dreams today, Northeast Iowa Regional Board of REALTORS® has the experience and expertise needed to find the perfect match. Contact us today to learn more about our listings!


Homeownership! Building Communities One Dream at a Time. Visit www.IowaRealtors.com.