Buying a house is a big commitment. 40% of Americans say buying a new home is the most stressful event in modern life (Home.com). That being said, there are aspects to owning a home that might reduce stress...can anyone say "tax break?"
The 6 Key Tax Benefits to Owning a Home:
1. A deduction of up to $750,000 worth of mortgage interest.
2. If you buy your home for $500,000, and it is worth $1 million when you die, your heirs' cost basis re-sets at $1 million and you bypass the capital gains on the initial value gain.
3. A $250,000 tax-free capital gain deduction for singles and $500,000 for couples upon selling. In order to receive the exclusion, you have to live in the house as your principal residence for 2 out of 5 years.
4. Tax-free rental income of 2 weeks if you rent your home out for 2 weeks per year.
5. A SALT (state and local real estate taxes) deduction up to $10,000.00.
6. The current tax law allows you to take a tax deduction of $5 per square foot, for up to 300 square feet of office space. You can get a maximum deduction of $1,500. To receive this, your home office needs to be your principal place of business where you have regular and exclusive use for business.