If you are on the fence about buying a Newport Beach home, consider that the tax benefits of Newport Beach home ownership can be attractive.
What are the tax benefits of buying a Newport Beach home?
- Mortgage interest reduction. A Newport Beach homeowner can deduct the interest on a mortgage up to $1 million on a principal residence and/or second home. Depending on your income bracket this could reduce the cost of your payments by a third or more.
- Property taxes. Local and state property taxes paid can be deducted on your federal income tax return.
- Cost of home purchase. There are various costs involved when you buy a Los Angeles home: closing costs, loan origination fees, prorated interest on a new loan, prorated property taxes paid on closing. All these are deductible expenses.
- Home -sale exclusion This applies to Newport Beach homeowners who have lived in their home for any two years of a five-year period prior to the sale. You can deduct $250,000 as a single person, or $500,000 as a married couple filing jointly, from the overall profit on the sale, thereby avoiding taxes on that portion of the profit.
- Rental income. Newport Beach homeowners may rent their homes for up to 14 days a year and pay no tax on that income.
These are some great reasons to consider when looking at the benefits of home ownership.