5 Tax Benefits of Owning a Home

Real Estate

5 Tax Benefits of Owning a Home: A Complete Guide for Filing This Year

You may remember that during the height of the COVID-19 pandemic, the Internal Revenue Service delayed filing season by about two weeks. But just like last year, there are no extensions and the date for filing is April 18, 2023. (According to the IRS, “The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2023, to file their returns due to the Patriots’ Day holiday in those states.”)

Tax Break 1: Mortgage Interest

Why it’s important: The ability to deduct the interest on a mortgage continues to be a significant benefit of owning a home. And the more recent your mortgage, the greater your tax savings.

Tax Break 2: A Home Office

Good news for all self-employed people whose home office is the principal place where they work: You can deduct $5 per square foot, up to 300 square feet, of office space, which amounts to a maximum deduction of $1,500 Does Not apply t0 w-2 working remotely.

Tax Break 3: Interest on a Home Equity Line of Credit

If you have a home equity line of credit, or HELOC, the interest you pay on that loan is deductible only if that loan is used specifically to “buy, build, or improve a property”.

Tax Break 4: Property Taxes

This deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are.

Tax Break 5: Energy Efficiency Upgrades

Qualifying solar electric panels and solar water heaters are good for a credit of up to 30% of the cost of the equipment and installation. You can also nab an energy efficient home improvement lifetime credit of a $500 for improvements made to your home through December 31, 2022. Energy-efficient upgrades include things like exterior windows, doors and skylights, insulation, and the cost of home energy audits. Here’s some more good news, the IRA passed an extension and expansion of the credit, so starting January 1, 2023, the amended credit will be worth up to $1,200 per year for a qualifying property.

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Brownstone in the Capital District

Brownstone Architecture in the Capital District

Written by Jennifer Mentiply

Brownstone is a brown sandstone that was used as building material in the late 1800’s and early 1900’s.

What is Brownstone?

Brownstone is a term that has been used to describe townhomes in urban settings. The term applies to a style of building that is built of brick, concrete masonry, or material to give the look of a brick or stone material. In the Capital District, it is not uncommon to see these buildings contain 2-4 units. Often times they are in a Historic District, and have been renovated. These properties are often beautifully remodeled with the original integrity of the home either in mind or restored. You can find unique features like pocket doors, curved arch ways, exposed brick walls, and beautiful details on exterior trim of these homes.

Where Can You Find These?

These homes can be found in some of our oldest cities in the Capital District. Specifically, The Stockade of Schenectady, Greenwich Village of Albany, and The Antique District on River St. in Troy.

The Stockade of Schenectady, NY is located on the banks of the Mohawk River and most commonly known as Front St. The preservation of this area and the culture established by its residence is captivating. You can walk the streets and see vibrant colors and yet feel like you stepped back in time.

Greenwich Village is more commonly known as Lark St. in Albany, NY. This area has a cool urban funky vibe. Some Streets are still lined with Cobblestone from the turn of the century!

Better Known as River St, The Antique District in Troy, NY is nestled along the Hudson River and is the new spot for nightlife, gourmet restaurants, shops, and beautiful apartments made from large historic brownstones. Lots of developers have come in to preserve the architecture of this area and revamped churches into venues, and brownstones into luxury apartments with unique details like original floors, archways and fireplaces!

You can find a blend of commercial businesses and residential townhomes in this area. It is also known for it’s cuisine, coffee shops, and small boutiques many of which are located in the basement of these brownstones.

For more details on homes in the area, call me! I love unique properties.

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Top 4 Deal Killers for Homebuyers

Top 4 Deal Killers for Homebuyers

Falling in love is exhilarating. It can also be a bit scary, especially when a home has captured your heart. What if something goes wrong and you end up not spending the rest of your life with this stack of brick and mortar you’re lusting after?

No matter how careful you are, some deal killers are unavoidable. Others, however, are preventable, so pay heed if you hope to keep your deal alive.

1. Don’t Mess with Your Mortgage Pre-approval

A common reason for a real estate deal to fall apart is that many homebuyers don’t fully understand the mortgage process. Sure, you may get a loan preapproval, but don’t think for one minute that this guarantees you will get the loan. It doesn’t.

Here’s what happens after you receive your preapproval letter and decide to move forward with the purchase. The lender will start your file, give you a list of paperwork required, order an appraisal and credit reports, verify your employment and income, and more.

The file is then sent to the processor who will review all of your information as well as the appraisal. He or she will then put together a package of all pertinent information to be sent to the underwriter.

The underwriter is the person who ultimately determines whether or not you are an acceptable credit risk. He or she will assess your ability to repay the loan, your credit, and the collateral used to secure the mortgage – in this case the collateral is the home. Then, just before funding the loan, the underwriter will perform what is known as a “soft pull” of your credit information to see if anything has changed.

This is the point where many borrowers run afoul. If you hope to keep your purchase alive, don’t do anything – from application to closing – that might change your financial picture and sabotage your final approval. This means no shopping on credit for appliances, furniture or anything else. Don’t switch jobs, fall behind on your bills, co-sign a loan for anyone, or in any way reduce the income stated on your application.

2. Read Homeowners Association Documents Carefully

When you purchase a home in a managed community governed by a homeowners association (HOA), you’ll be given a mountain of paperwork to read and approve. Because there may be deal killers included in the fine print, it’s important to get to this task immediately upon receipt of the documents.

Look for any information about liens against the property; current litigation against the HOA, the builder, or the developer; and any red flags in the HOA budget. Since these documents aren’t easy to read and understand, it is worth the money you’ll spend to have your attorney look them over and advise you of any potential deal killers lurking within.

While the aforementioned HOA problems could potentially derail the deal, it’s better to have it happen upfront rather than when you’re further along in the process

3. Home Inspection Problems

All homes – even newly constructed ones – may have problems. Going into the process not fully understanding this can set you up for a failed real estate deal. Sure, you ideally want to find a home that was owned by Mr. or Mrs. Clean who conscientiously took care of it during their entire ownership, but those are few and far between, and seeking them out is unrealistic.

Set your sites on finding a home that has small, easy-to-fix problems, and don’t freak out if some are worse than others. In other words, when considering making an offer, laugh at the loose doorknob but negotiate when it comes to water damage or worse.

The nitpicky homebuyer, who plans on nickel and diming the homeowner into replacing missing switch plates and dripping faucets, is the picture of a deal-breaker-in-the-making. Sure, in a buyer’s market you may get away with minor demands. In a seller’s market, however, there is always a cleaner offer right behind yours.

4. Budgeting Blunders

The real estate industry does a bang-up job of reminding homebuyers that they’ll need a down payment – typically from 3 percent to 20 percent of the total loan amount – when they purchase a home. What they often fail to inform real estate consumers about are the loan’s closing costs – the money you will be required to pay before the house is yours. This is most likely because closing costs are a little harder to pin down. They vary wildly and depend on the type of loan, the amount of the down payment, and a host of other factors.

Unfortunately, this lack of information frequently causes real estate deals to disintegrate. To avoid this particular problem, pay attention to all communications from your lender.

First, you will receive a form called a Loan Estimate. Look this over carefully to ensure that everything your lender agreed to is included. Pay close attention to the “Calculating Cash to Close” section, which concludes with an estimated cost to close the loan. Remember, this is an estimate and the amount may go higher or lower in the end. Speak with the lender if you find any problems here, especially if it will be impossible for you to come up with this money.

Just before closing you will receive the “Closing Disclosure,” which is quite similar to the estimate, but these figures are final. Again, review the “Cash to Close” figure.

By and large, real estate deals conclude successfully. Typically, it all comes down to the experience of your agent. Choose wisely and you’ll avoid the common pitfalls that can derail transactions. For a smooth, low-stress real estate transaction, slow down, keep your expectations realistic and heed the advice of your real estate agent or attorney.

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