Texas Homeownership Tax Info

Written by admin on May 9th, 2011

Buying a home in the State of Texas can be a really good investment option. You can have a solid investment in your hands and the value of the property will likely rise in the years to come. As a homeowner you should pay all taxes applicable on your property correctly, otherwise you may be subject to penalties. If you are a smart homeowner, you will also find ways by which you can legally cut down on your tax burden and increase your savings.

A great benefit of homeownership is receiving the many applicable tax deductions. Those who have taken a home mortgage can deduct their mortgage interest payments. In addition, if you are late on a monthly mortgage payment, you will likely get charged a late payment fee and the late fee is also tax deductible. If your property purchase comes under the category of a 1031 property exchange, you are exempt from paying tax on the capital gains of the property.

You can also make tax deductions on the loan points charged to you when you receive a home mortgage. One point is one percent of the principal loan amount. In the case of home loans, one to three points are normally charged and in terms of tax deductions this can add up to thousands of dollars, which can prove to be a good savings for you. If you are refinancing your home, points paid to the lender for refinancing your home are also tax deductible if they are amortized over the loan lifetime. If you have taken a home equity loan and used the money to make considerable home improvement, the interest paid on the equity loan is also tax deductible.

Tax deductions are specific to state laws, and they constantly change, so it’s best to consult a qualified property tax auditor who can show you the various ways to deduct taxes. Tax deductions are offered by the government to encourage people to buy property and are just one more benefit of homeownership. By looking for ways to reduce your taxes, you can free up money for other crucial expenses. On the other hand, being unaware of tax deduction benefits may mean that you lose out on financial savings.

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