also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Tax advantages of home ownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption. This exemption is a tax-savings method designed to decrease homeowner's overall tax burden. Many states exempt owner-occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. For instance, in Florida, a homeowner may be eligible for up to $50,000 in homestead exemptions. The first $25,000 would apply to all property tax, including school district. An additional $25,000 could be applied to assessed value from $50,000 to $75,000. For more information, go on floridarevenue.com or see section 196.031, Florida Statues. • Federal tax deductions. When you are looking to purchase a home, it is important to understand what can be deducted on your tax return and what can’t. Property taxes and interest paid on your mortgage can be deducted if you itemize your federal income taxes, which can reduce your income tax burden. Many home buyers, unfortunately, overlook the effect of mortgage interest on their federal income tax payments. Mortgage interest can be a powerful financial planning tool. Calculate the 22
Powered by FlippingBook