Maintenance Tips for New Home Owners

As a new home owner, you are excited about getting your house in order — setting up furnishings, rearranging and decorating.  But once you have place for everything and everything in its place, it’s time to get a handle on the routine maintenance you’ll need to perform to help ensure that you and your family live comfortably in your new home for years to come.

Maintaining a clean home is one way to ensure its longevity. Here are some tips for properly maintaining some of the systems in your new home:

Heating and Cooling Systems

• Late summer or early fall are the ideal times to do an annual inspection and cleaning of these systems.
• Change or wash the filters every three months.
• If you have a gas furnace, keep your pilot light burning during the summer to help keep the furnace dry and prevent corrosion.
• Registers help regulate the flow of air and maintain the desired temperature in your home.  Keep registers closed in rooms you don’t use to save on cooling/heating costs.

Plumbing

• Every member of your family should know where the intake valves are located.  Label each one.
• If any of your appliances develop a leak, inspect your drain trap.  A partially clogged drain can cause overflow. Use a plunger or a plumber’s snake to unclog the drain. If you need to, use boiling water to help unclog a partially opened drain. Call a plumber if these techniques don’t work.
• A worn washer, a loose part in a faucet or steam in a hot water pipe are generally the causes of a noisy pipe.  Do not hesitate to repair the noise — vibrations can follow the noise and lead to leaks.

Gutters and Downspouts

• Clear away leaves, tree limbs and other debris from gutters and downspouts.
• Turn the downspouts away from your home’s foundation.
• Every four to six years, paint gutters that are not made of aluminum or vinyl to help prevent rust. 

Remember to read the instruction manual for every appliance in your new home.  The manuals provide recommended cleaning and maintenance schedules. Also familiarize yourself with any warranties you have on both the house and its systems. Some warranties may be voided if problems arise because of failure to perform routine maintenance.

For more information about taking care of your new home, visit www.nahb.org/forconsumers, or contact your local home builders association via e-mail by clicking here.

With Most Buyers Now Eligible for Limited-Time Tax Credit, Is This the Best Time to Buy a Home?

On November 6, 2009 President Obama signed into law new legislation that extends the first-time home buyer tax credit beyond its Nov. 30 deadline and expands it to a wider group of home buyers. Combined with historic low interest rates, competitive home prices, and affordable materials and labor costs, the newly extended and expanded tax credit could make this the best possible time to build or buy your next home. Below is a video that explains the facts and answers many of the most frequently asked home buyer questions regarding the tax credit. Highlights of the extended and expanded credit are detailed below. You can also get even more information by visiting www.federalhousingtaxcredit.com

Highlights

• The unemployment extension bill that was signed into law on Nov. 6 by President Obama has major benefits for both new and existing home buyers.
• It extends the $8,000 tax credit until April 30, 2010, for first-time home buyers.
• Further, a new $6,500 tax credit has been created for repeat buyers who are purchasing a principal residence during the same period.
• Repeat buyers can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.
• Both categories of home buyers have until June 30, 2010, to close on the home after signing a contract prior to May 1, 2010.
• In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for couples.
• Single taxpayers earning between $125,000 and $145,000 can claim a partial credit of less than $8,000 for a first-time home buyer and $6,500 for an existing buyer, while the phase-out for married couples ends for those earning above $245,000.
• Buyers can claim the tax credit on their 2009 or 2010 income tax return.
• The tax credit does not have to be repaid. However, home buyers must use the residence for at least three years or face recapture of the credit amount.
• Since tax credit is fully refundable, it means that the home buyer can claim the credit even if they owe little or no federal income taxes. In other words the government would write you a check.
• For example, if a home buyer owes the government $3,000 in federal taxes and qualifies for the $8,000 home buyer tax credit, the taxpayer would receive a $5,000 refund check from the IRS ($8,000 minus the $3,000 owed).
• Homes over a purchase price of $800,000 do not qualify.

Act Soon to Take Advantage of the Home Buyer Tax Credit

• Like all good things in life, the tax credit won’t last forever.
• Even as the bill neared passage, proponents of the home buyer tax credit made it explicitly clear that the extension would have a limited shelf life and not be extended again when it expires next year.
• Sen. Johnny Isakson (R-Ga.), a long-time champion of the home buyer tax credit, said, "This is the last extension of the home buyer tax credit. Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back."
• On the floor of the Senate, Finance Committee Chairman Max Baucus (D-Mont.) said: “It is important that this tax credit does not become a permanent fixture in the tax code.” Baucus added that the seven-month extension of the tax credit would be “long enough to encourage home buyers to buy homes, but it’s short enough to remain fiscally responsible.”

A Great Home Buying Opportunity

• Current market conditions are excellent. With the home buyer tax credit now available to a much broader group of consumers, it adds up to an unprecedented opportunity for home buyers.
• Mortgage interest rates are near 5 percent – the lowest level in decades.
• There is a great selection of homes to choose from.
• Home values in many markets are at the lowest level since 2003.
• Many builders have inventory that is “move-in ready,” and they may offer upgrades or other incentives to seal the deal.
• Likewise, owners of existing homes who are looking to trade-up or relocate are ready to bargain.
• Add it all up and there may never be another buyer’s market as good as today’s.

Time is Running Out to Receive $8,000 First-Time Home Buyer Tax Credit

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid. But time is running out. This unprecedented incentive expires on December 1, 2009. Buyers considering purchasing their first home would be wise to act sooner than later.

With building materials and labor costs at historically low prices, today already is a great time for first time home buyers to consider making that leap. Add to that an $8,000 tax credit, monetized so it can be used as a part of the down payment on that first home, and it is hard to imagine a better opportunity to become a homeowner.

The 7-minute video below gives a complete overview of the tax credit, who qualifies, how it can be utilized, etc. It also answers some of the most frequently asked questions about the first-time home buyer tax credit. And, lots more information also is available at federalhousingtaxcredit.com.

Avoid Foreclosure Rescue Scams

Home owners: Don't let a scam foreclosure rescue company turn your mortgage distress into disaster. Watch this video from the Federal Trade Commission (FTC), the nation's consumer protection agency, to learn the signs of a foreclosure rescue scam and where to get FREE help.

KY3 News: HBA Parade of Homes Offers Something for Everyone

KY3 reported Saturday on the HBA Parade of Homes, open through Sunday, June 28 until 6pm. Home Builders Association of Greater Springfield CEO Matt Morrow was asked for a synopsis of the HBA Parade and the current home building economy.

Click on the video below to watch, or if you are receiving this message in text format, click here to view the video directly on SpringfieldHBA.com

HBA Remodelors Council Offers Expert Advice via KY3.com to Consumers

KY3 and the Home Builders Association of Greater Springfield are partnering on KY3's latest "Ask an Expert" offering. This latest venture offers blog-based expert advice from members of the HBA Remodelors Council on all your home improvement projects. HBA Remodelors Council Chair Andy Flint is interviewed by KY3's Cara Restelli in this June 9 TV news story introducing the program. Watch the story by clicking on the video below, or if you are receiving this post in text format, click here to view directly on SpringfieldHBA.com. Want to post a question for HBA remodelors or browse questions and answers already posted? Just click here to check it out.

HBA Launches New Home Show In Branson/Tri-Lakes Area This Weekend

HOME BUILDERS ASSOCIATION LAUNCHES NEW HOME SHOW
IN BRANSON/TRI-LAKES AREA THIS WEEKEND

BRANSON, MO -- The HBA will launch a new show in the Branson/Tri-Lakes area this week -- The Home Idea Showcase. The two-day show will take place at the Branson Convention Center the weekend of May 16-17.

On Saturday the show will be open from 10 am to 8 pm and Sunday’s hours are from 10 am to 4 pm. Admission cost is $5 per person; children 12 and under are free. There are 117 vendors participating in the new show.

“The response to the Home Idea Showcase has been excellent,” said HBA Operations Manager Charlyce Ruth. “We had the opportunity to enlarge our vendor capacity and so the show will be larger than originally planned.”

“This is one of the most direct and substantive ways we can work to stimulate the housing industry locally while at the same time helping home owners conveniently connect with the quality home-related goods and services they need, all under one roof,” said CEO Matt Morrow. “It’s been proven that for every 100 homes built, it creates 284 jobs and generates millions in revenue for area governments. That’s pretty ‘real’, measurable economic stimulus.”

Morrow went on to say the timing and location of the show couldn’t be better. “This is a fantastic time of year to encourage people to think about home improvement and new construction,” said Morrow. “Having such a strong, high profile venue like the Branson Convention Center for a new show makes me feel very positive about this opportunity.”

Besides excellent mortgage rates and improved supply costs, Morrow added that there are many reasons for those pondering a new home or remodeling project to take that next step. “For example, first-time home buyers who meet certain criteria can get their hands on up to an extra $8,000 through a federal tax credit, which does not have to be repaid. Plus, in the state of Missouri you may qualify for a short term loan from the Missouri Housing and Development Corporation if you want to use that money to help with your down payment,” he said.

There are also seminars featuring HBA member professionals for Home Idea Showcase attendees, at no additional charge. (See schedule below) For those interested in a “Buy One Admission, Get One Admission Free” coupon, visit the HBA’s website at http://www.greaterozarkshba.com/ and click on the link that says “Free E-Coupon.”


HOME IDEA SHOWCASE SEMINAR SCHEDULE

Saturday, May 16 10 am – 8 pm

Noon

Clean Clear Water Solutions for the Lake Living Area
Hewitt-Messenger Well Drilling

2 pm

Housing Plan Magic Tricks: You Can Have It All!
B&G Drafting, Inc.

4 pm

Color Forecast & Design Trends
Springfield Design Association


Sunday, May 17 10 am – 4 pm

Noon

Color Forecast & Design Trends
Springfield Design Association

1 pm

Which Remodeler Is Right For You?
HBA Remodelors™ Council

2 pm

House Plan Magic Tricks: You Can Have It All
B&G Drafting, Inc.

KY3: Protect Yourself from Unexpected Liens Against Your Property

Homeowners should take protective steps to select professional contractors and obtain lien waivers on home improvement and construction projects. Contact KY3's Cara Restelli interviews Home Builders Association of Greater Springfield CEO Matt Morrow for helpful steps homeowners should take to avoid unexpected liens against their property.

Watch the video story by clicking on it below. Or, if you are receiving this post in plain text format, click here to view it directly on SpringfieldHBA.com.

Foot Traffic Up as Home Buying Becomes More Affordable

From Nation's Building News:

Thanks to record low mortgage rates and declining home prices, 55 million families — or half of all U.S. households — can afford today's $200,000 median-priced new home, according to figures released by NAHB.

"That's an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years," said NAHB Chairman Joe Robson. "We are now seeing the first signs that buyers are returning to the marketplace."

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and the minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance.

About 55.4 million households can afford to purchase a home today, compared with 38.4 million two years ago, according to figures compiled by NAHB.

"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom," said Robson.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11% in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down.

In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority — 78% — said that now is a good time to buy a home. Of those responding to the online poll, 68% said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March, 1.5 million visitors logged on to NAHB's consumer Web site, www.federalhousingtaxcredit.com, to learn more about the tax credit.

Further, a new survey commissioned by Move, Inc. found that nearly 20% of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

"With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5% and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market," said Robson.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.

Construction of an additional 500,000 single-family homes — the difference between today's anemic construction rate and one that would move closer to meeting the underlying demand for housing — would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade and service sector jobs, he noted.

Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

"Clearly, housing will be central to any economic recovery we experience in the months ahead," said Robson.

For more details on how lower prices and interest rates during the past two years have spurred a significant uptick in affordability, click here.

New Home Buyer Tax Credit is Bigger and Better

On Feb. 17, President Obama signed the American Recovery and Reinvestment Act of 2009 into law. As part of $787 billion in economic stimulus measures, the legislation created a home buyer tax credit that is bigger and better than the previous credit that was implemented in July 2008.

  

The Web site www.FederalHousingTaxCredit.com explains in detail the provisions of the new tax credit.  In a nutshell, it:  

• Provides a tax credit equal to 10 percent of the sale price of the home, up to an $8,000 maximum. Is a true tax credit. It does not need to be repaid, unless the home owner sells the home within three years of the purchase.

• Can only be used with the purchase of a home that will be the buyer’s principal residence. It cannot be claimed for the purchase of a vacation home or property to be used as a rental. 

• Available to first-time home buyers only. A first-time home buyer is defined as someone who has not owned a principal residence for three years or more.  

• Applies to homes purchased by qualified buyers between Jan. 1 and Nov. 30, 2009. The purchase date is the date when closing occurs and the title transfers.

“This new tax credit provides an unprecedented opportunity for people looking to buy their first home,” said Home Builders Association of Greater Springfield President Rusty MacLachlan.  “Not only will they receive an $8,000 tax credit, they also will be taking advantage of record-low interest rates, a large selection of homes to choose from and competitive home prices.”

House hunters will also find that many builders have inventory that is “move-in ready” and priced favorably for buyers.  Also, owners of existing homes who are looking to trade-up or relocate are ready to bargain.  And, as a long-term investment, homeownership remains a solid investment for Americans.

MacLachlan warns, however, that this opportunity won’t be around forever.  “Keep in mind that you have to purchase your house on or before Nov. 30.”

For more resources to help you understand the process of financing and buying a home, visit www.nahb.org/forconsumers today. Or, contact the Home Builders Association of Greater Springfield or visit SpringfieldHBA.com's "Helping Your Home" page. Or, visit www.nahb.org/forconsumers.

Homeowners Can Take Advantage of Federal Tax Credits in Stimulus Package

Energy Star has published comprehensive information on how the housing industry and consumers can take advantage of the federal tax credits for energy-efficient home improvements in the new economic stimulus package. The credits are expected to significantly increase demand for green renovation projects this year and next, according to federal officials.

Congressional economists project that the new provisions will generate an estimated $6 billion in remodeling work by the end of 2010. "Remodelers are trained in and experienced with making energy-efficient upgrades. They are well-suited to help consumers interested in consuming less power," said HBA executive officer Matt Morrow. "They can also use the tax credits to encourage home owners to undertake a more complete renovation that can be certified under the National Green Building Standard as part of NAHBGreen, the NAHB National Green Building Program." For a list of HBA of Greater Springfield remodeler members, visit SpringfieldHBA.com and click on "Find A Pro"; then, enter the word "remodeler" in the search field and click the green "Go" button. This will generate a current list of remodeling contractors.

The Internal Revenue Code Section 25C for existing homes, which had expired at the end of 2007, was reinstated as part of the economic rescue package passed by the Bush Administration last fall. Installing energy-efficient windows, doors, roofing and insulation as well as furnaces, air conditioners and heat pumps all qualified for the credit. Under the stimulus legislation signed by President Obama, the percentage of the cost and lifetime cap have been tripled to 30% and $1,500, respectively, and the deadline for installing them has been extended through the end of 2010.

In addition to expanding the 25C tax credit, the IRS 25D credit for renewable energy products has also been expanded and is even more generous for specific improvements — including geothermal heat pumps, solar panels, solar hot water heaters, small wind energy systems and fuel cells. The 30% tax credit applies to these products but there is no cap on their cost through 2016. In addition, these credits also apply to new construction, as well as to remodeling and renovation projects.

The newly expanded tax credits are in alignment with industry research showing that remodeling and retrofitting the nation’s older homes will have a far more significant impact on reducing residential energy consumption than meeting even the most aggressive efficiency goals for new homes, according to Greg Miedema, CGR, CGB, CAPS, chairman of NAHB Remodelers.

A December 2008 survey by Whirlpool Corporation revealed that 84% of consumers said that energy efficiency is significantly more important than water use or other potential savings when it comes to home appliance efficiency. Seventy-two percent of respondents seek the Energy Star label when making purchasing decisions.

A 2008 California study showed that homes built before 1983 were responsible for 70% of the greenhouse gas emissions related to single-family envelope energy consumption. The study also found that spending $10,000 to retrofit a 1960s home could save 8.5 tons of carbon at a cost of $588 to $1,176 per ton, depending on existing tax credits and incentives. By comparison, increasing the energy efficiency of a new home 35% over current state requirements would cost about $5,000 and would reduce emissions by 1.1 tons at a cost of $4,545 per ton.

The bottom line is that retrofitting existing homes with energy-efficient features is four to eight times more carbon- and cost-efficient than adding further energy-efficiency requirements to new housing, the study showed.

Tax Credit How-to
Details on qualifying improvements are available on the Energy Star Web site. Home owners should familiarize themselves with the model types and products that qualify for the tax credit so they can be certain their projects are eligible. Read instructions carefully about how to verify a claim. Certification statements in the manufacturer's product information may suffice.

Home owners can claim the 25C and 25D credits on Form 5695 when they prepare their income tax returns. They should also retain records that include:
• Name and address of the manufacturer
• Identification of the component
• Make, model or other appropriate identifiers
• Statement that the component meets the 25C standards
• Climate zones for which the criteria are satisfied
• Additional information for storm windows, if applicable
• A declaration that the certification statement is true

KY3: Home Builders at HBA Home Show Hope for Rebound in 2009

Contact KY3's Cara Restelli reported Tuesday on the local housing economy. She interviewed HBA of Greater Springfield President Rusty MacLachlan and HBA Executive Officer Matt Morrow as they worked to set up the 2009 HBA Home Show at the Springfield Expo Center in Springfield Missouri. To watch the news story click on it below or simply click here.

HBA Home Show Opens Friday

The HBA of Greater Springfield's annual Home Show opens Friday, February 6 and runs through Sunday, February 8. To watch the television commercial for the 2009 HBA Home Show, click on the ad below, or simply click here.

Springfield News-Leader: Get Advice on Home

Tuesday's Springfield News Leader offered a preview of this weekend's HBA Home Show:

Get advice on home

February 3, 2009

News-leader staff

Who couldn't use some advice from experts about making the most of your new or existing home?

The 2009 Home Builders Association Home Show Friday through Sunday will cover everything from what's hot in design to improvements that add the most value to your home.

More than 240 exhibitors will occupy 480 booths at the Springfield Expo Center, 638 St. Louis St.

Admission is $6 per person or $10 for an event pass for all three days. Children 12 and under get in free.

Times: noon to 8 p.m. Friday, 10 a.m.-8 p.m. Saturday and 10 a.m.-4 p.m. Sunday.

HBA executive officer Matt Morrow said he believes there's considerable evidence that the Springfield area may be ripe with pent-up housing demand.

"Our recent local market research demonstrates that, unlike many markets around the country, our builders here did not attempt to 'build through' the slowdown. They stopped building new spec homes," he said in a news release.

"We don't have the burden of being excessively overbuilt. Once we begin to see improvements in perceptions about the availability of credit and a more stable national economy, I think our region's housing market will quickly heat up," Morrow said.

One show seminar deals with bursting the notion that banks are not making loans, he said.

"You CAN Get a Loan," will feature a panel of local lenders for those seeking advice about financing.

The session is set for 4 p.m. Friday, 3 p.m. Saturday and 2 p.m. Sunday.

Today's market, coupled with a temporary tax credit for first-time home buyers and near-record low mortgage interest rates, provides an opportunity for prospective home buyers, Morrow said.

Additional Facts

HBA schedule

Demos and seminars

Friday

- 1 p.m.: Wedi Shower Systems: The Total Solution for Wet Areas

- 2 p.m.: Which Remodeler is Right for Your Project?

- 2:30 p.m.: How Infrared Technology Enhances Your Energy Choices

- 3 p.m.: Building on Smart Design: A Whole House Approach

- 4 p.m.: You CAN Get a Loan

- 4:30 p.m.: Lean Green Water Machines

-5 p.m.: Color Forecast & Design Trends

Saturday

- 11 a.m.: Benefits of Energy Efficient Glazing

- Noon: Color Forecast and Design Trends

- 12:30 p.m.: Green Building with Electronics

- 1 p.m.: Building on Smart Design: A Whole House Approach

- 2 p.m.: Improving for Value & Lifestyle

- 2:30 p.m.: Window Replacement -- Improve Your Home While Preserving Its Charm

- 3 p.m.: You CAN Get a Loan

- 4 p.m.: House Plan Magic Tricks: You Can Have It All

- 4:30 p.m.: Secrets of Home Security

- 5 p.m.: Choosing the Best Window to Keep You & Your Budget Green

- 6 p.m.: Color Forecasting 2009: What's Hot & What's Not

Sunday

- 11 a.m.: How Insulation Really Works

- Noon: Which Remodeler is Right For Your Project?

- 12:30 p.m.: Solar Energy, the Alternative You've Been Looking For

- 1 p.m.: House Plan Magic Tricks: You Can Have It All

- 2 p.m.: You CAN Get a Loan

Home Storage Tips & Tricks

When you first move into your new home, you wonder how you are going to fill up the large, empty space.  Pretty soon life takes over — and before you know it, you are wondering where all of that space went.

If you find yourself struggling to find room to store everything you’ve accumulated over the years, see if these storage options might work for you.

Do An Audit

Before you invest a lot of time deciding where things should go, look through your closet, files and drawers to determine what can be thrown or given away.  For clothes, it is a good rule of thumb to get rid of items that you have not worn in more than 12 months.  

A lot of your household financial documents and papers may be available online through the provider company’s Web site.  If that is the case, discard old financial statements or bills that you can more easily access electronically.  Invest in a paper shredder for these documents to protect your identity and accounts.

It is very easy to allow cabinets and drawers to become cluttered over time, especially when you have to do a quick cleaning of your home when you have surprise visitors.  Declutter those drawers periodically to keep from accumulating outdated flyers, menus, magazines and newspapers.  This will open them up so you can store more day-to-day items that you need to quickly reach.

Buy Furniture That Doubles as Storage

If you are looking to replace old, worn-out furniture in your home, buy pieces that also can serve as storage.  Consider a coffee table that has drawers or an ottoman that can open up and double as a spot to store your blankets.

Make Use of Wasted Square Footage

In closets and in the kitchen,use all of the space that is available to you.  Often home owners are giving up valuable square footage if they don’t install cabinets or shelves that go up to the ceiling.  Store items that are either out of season or that are rarely accessed — such as holiday decorations — on the higher shelves where they are out of the way.  This will free up the lower shelves to allow you to get to the things that you use on a regular basis.

Bed Risers

By simply raising the height of your bed a few more inches, you can gain a lot more storage space that is also hidden away.  Bed risers can be found in home design and improvement stores in different shapes, styles, textures and colors to complement your current bedroom furniture. They are inexpensive and not only give you added storage space, but will also give your bedroom a new look. 

For more tips on home design and maintenance, contact the Home Builders Association of Greater Springfield or visit SpringfieldHBA.com's "Helping Your Home" page. Or, visit www.nahb.org/forconsumers.

Tax Advantages of Homeownership

Owning your own home can be a very rewarding experience — especially when tax time rolls around. Three tax items in particular — the mortgage interest deduction, the property tax deduction and the capital gains exclusion — can provide significant financial benefits to home owners when the time comes to settle up with Uncle Sam. 

Mortgage Interest Deduction

The interest you pay as part of your mortgage payment is deductible on your federal tax return and may also be on your state income tax return depending on where you live. 

This deduction applies to first and second mortgages, up $1 million of mortgage debt. Your lender should provide you with one or more IRS Form 1098s, which will provide the amount you may claim on your tax return. To benefit from this deduction you must itemize your deductions using a Schedule A Form. 

You may also deduct the interest on money you borrow against your home to finance housing or non housing-related expenses. An example is a home equity loan, which many home owners use to remodel their home, pay off credit card bills, buy a car, finance a vacation or pay for educational expenses. 

Property Tax Deduction

State and local taxes paid on the assessed value of the home are also deductible on your federal return.  Like the mortgage interest deduction, itemizing is necessary if you wish to deduct property tax payments.   

Notably, for many home owners the combined deductions for mortgage interest and property taxes exceed the standard deduction — currently between $5,450 and $10,900, depending on filing status. When this is the case, home owners are able to deduct or “write-off” many other items including charitable contributions, state income or sales taxes, medical and dental expenses, tax preparation fees and other miscellaneous allowable deductions, which collectively can reduce your federal and state income tax liabilities dramatically.   Research by economists at the National Association of Home Builders indicates that for the typical home owner, these savings can exceed $8,000 in the first year of homeownership.

Capital Gains Exclusion

Perhaps the biggest advantage to owning a home is the ability to avoid paying capital gains when it is sold. Under current law, married home owners filing jointly may exclude up to $500,000 of capital gains and single tax filers may exclude $250,000 from taxation. This exclusion applies only if you have lived in your primary residence for two years or more. But the exemption may be used repeatedly as long as the residency rules are met. 

The tax benefits conferred on home owners by the federal government are substantial. Annual benefits, such as the mortgage interest deduction and the property tax deduction, along with the less frequently used benefit of the capital gains exclusion, make homeownership more tax advantageous than almost any other investment. Take advantage of it! 

Be sure to consult your tax advisor about the deductions you may be eligible to claim.

To see the many more reasons homeownership benefits you, contact the Home Builders Association of Greater Springfield or visit SpringfieldHBA.com's "Helping Your Home" page. Or, visit www.nahb.org/forconsumers.