10 Ways Owning a Home Can Save

TEN

WAYS

Owning a Home Can Save You Money At Tax Time From almost the very beginning homeownership has been the financial foundation for the American dream. If you’re like most of us, purchasing a home is the largest investment you’ll make in your lifetimes. Unlike renting, where you pay your landlord’s mortgage, own a home provide you with a “nest egg.” The equity that your home accrue’s over time is the financial cornerstone for financing your retirement, and ensuring an inheritance for your children after you’re gone. But equity isn’t the only benefit of homeownership. This guide includes 10 tax benefits you need to know about.

Noel D. Rivera

561.249.9703 Cell

Sales Manager

561.948.3336 Office

NMLS: 1001664

877.225.6676 Fax

7300 N. Federal Hwy Suite 202 Boca Raton, FL 33487

nrivera@afncorp.com www.noelrivera.afncorp.com

*AFN is not a tax or financial advisor, and individual tax circumstances may vary. Please consult a licensed tax professional and appropriate government agencies to determine tax consequences of home ownership.

American Financial Network, Inc. is licensed by the Florida Mortgage Lender Servicer License (MLDB3356) under Nationwide Mortgage Licensing System (NMLS), unique identifier of 1295122.

Refer to www.nmlsconsumeraccess.org and input NMLS #237341 to see where AFN is a licensed lender. In all states, the principal licensed office of American Financial Network, Inc. is 10 Pointe Drive, Suite 330, Brea, CA 92821; Phone: (909) 606-3905 (NMLS ID#237341). This is not an offer for extension of credit or commitment to lend. All loans must satisfy company underwriting guidelines. Not all applicants qualify. Information and pricing are subject to change at any time and without notice. The content in this advertisement is for informational purposes only.

10 WAYS TO SAVE

Mortgage Interest Deduction Each year the federal government allows you to deduct the interest on your monthly mortgage payment. This deduction is available for the lifetime of the loan. Say you’ve purchased a home for $250,000. with an annual interest rate of 5%. In the first 12 months you’ll pay a total $12.500 in interest. When tax time comes around you can deduct the full amount of that interest from your earned income. While there are limits on how much you can deduct, most people rarely come close to reaching them.

Discount Points While not an ongoing deduction, if you’ve purchased points to lower the interest rate on your mortgage, you may deduct the cost of those points on your federal income tax in the year you bought your home. Many homebuyers purchase discount points up front to save on their monthly mortgage payment and increase their cashflow. A discount point is !% of the total amount of your mortgage. Using our example of $250.000 from above one point would be $2,500. For each discount point you purchase, you lower the intent rate on the life of your loan by .25 basis points - dropping your 5% interest rate to 4.75%.

Property Tax Deduction Owning a home means you are subject to property taxes which are paved to the county, city and state where you live. While the amount of interest on your mortgage tends to decrease yearly, property taxes tend to increase. This means the ability to deduct these taxes could save you more money each year. Also, should sell your home, be sure to deduct the prorated amount of property taxes paid in that tax year.

Page 2 of 4

10 WAYS PROBLEMS TO SAVE TO AVOID

Home Office If you work from home, your home office can provide additional tax deductions each year. Homeowners who have a home office are allowed to deduct the amount of monthly mortgage paid based on the square footage of the office as well as a portion of the utility bills, including heat, electric and internet service.

Health Related Home Modifications If modification to your home are required for health reasons such as improving access by adding a wheel chair ramp or widening doors, the costs of these improvements are deductible. Adding special equipment that is medically required such as an air purifying system for a family member with asthma, or an elevator or bathroom on a lower floor for a patient with a heart condition, these expenses may be deductible all, or in part, from that year’s taxes.

Home Improvements While regular home improvements are not deductible, provided you’ve saved your receipts, you can add the total cost of improvements made over time to the original purchase price of your home to decrease the amount of capital gains tax you would have to pay when you sell.

Moving Expenses In the event that you are required to relocate for work there are deductions available for the expenses associated with moving your family, possessions and even vehicles.

Page 3 of 4

10 WAYS TO SAVE

Capital Gains When Your Sell Speaking of selling. When it comes time to sell your home the difference between the original purchase price and the sale price is considered capital gains and is considered taxable income. However, as a single homeowner you are allowed up to $250,000, married homeowners up to $500.00, before you are required to pay capital gains tax. While not a deduction, this an an excellent profit to realize before paying taxes.

Mortgage Interest Credit If you are a low income homeowner you may be eligible for a mortgage interest credit. Designed to make paying for your home easier., this particular deduction requires a mortgage credit certificate that can be obtained from your local or state government.

Prepayment Penalties Finally, in the event your mortgage has prepayment penalty, and either for when you sell or are able to pay off the balance early, you are allowed do deduct the amount of the penalty as part of your mortgage interest deduction.

These homeowner deductions* are in place to encourage investment and can go along way in helping you grow that all important nest egg. *Be sure to consult your CPA or Financial Advisor to be sure you are eligible for these individual deductions.

*AFN is not a tax or financial advisor, and individual tax circumstances may vary. Please consult a licensed tax professional and appropriate government agencies to determine tax consequences of home ownership.

American Financial Network, Inc. is licensed by the Florida Mortgage Lender Servicer License (MLDB3356) under Nationwide Mortgage Licensing System (NMLS), unique identifier of 1295122.

Refer to www.nmlsconsumeraccess.org and input NMLS #237341 to see where AFN is a licensed lender. In all states, the principal licensed office of American Financial Network, Inc. is 10 Pointe Drive, Suite 330, Brea, CA 92821; Phone: (909) 606-3905 (NMLS ID#237341). This is not an offer for extension of credit or commitment to lend. All loans must satisfy company underwriting guidelines. Not all applicants qualify. Information and pricing are subject to change at any time and without notice. The content in this advertisement is for informational purposes only.