With orders in hand for an upcoming PCS (Permanent Change of Station), many military families, will have to decide whether buying or renting is the best option. When it’s time to make your decision, consider the tax benefits of home ownership. For many military families, including veterans, owning a home and settling down provides a sense of belonging.
With the start of the new year and looking ahead to April’s tax filing deadline, you’ll find that owning a home offers a military family several tax benefits. In addition to the tax-free Basic Allowance for Housing (BAH) military members receive, there are additional tax benefits of home ownership to keep in mind. Home ownership might make sense the next time you are looking to move.
As a military homeowner, you can deduct from your taxes any amount of mortgage interest you have paid throughout the year. Limits are in place based on the amount of your mortgage debt.
It seems almost ironic, but the local and state taxes you pay to own a property can be deducted from your annual income taxes. This deduction applies to any personal property, so it would include a main home, as well as a vacation home or land or property you own.
There may also be some closing costs paid for a home sale or purchase that can be claimed as a tax deduction. There are certain stipulations about the type and amount of the loan, but this is definitely one to ask your agent or tax advisor about. No one wants to leave money on the table!
While many moving expenses are reimbursed or covered through an allowance, there are some expenses that you incur in a military move that can be deducted from your taxes. For example, if your furniture goes before your family and you need a night in a hotel, save your receipt as that lodging could be deductible. Similarly, if you have to pay out of pocket without reimbursement to store a vehicle or some household goods, these expenses may also be deductible.
Make sure to keep all of your receipts and detailed records to make filing your taxes less stressful.
Home Improvement Loan Interest
If you take out a loan to make significant home improvements, you can deduct the interest on that loan. However, the work must be a “capital improvement” rather than ordinary repairs. For example, you decide to install that swimming pool in the backyard or add on so you have dedicated office space now that you work from home. These are considered “significant expenses” and can be deducted.
We’re Here to Help
Taxes and deductions are complicated so it’s always a good idea to consult a professional. As always, Realogy Military Rewards is here for you and your military family. Our team dedicated team is ready to answer your questions can help you decide if home ownership is right for you. In addition to working with an expert agent, you can earn $350-$7,500 in cash back after closing.
When you’re ready to get started, visit Realogy Military Rewards and hit “Sign Up” or call 1-800-752-3642 today!