Real Estate 101 - NC Homeowner Tax Deductions

With tax season around the corner, let’s take a look at some of the tax deductions for owning a property. Deductions lower your taxable income and therefore result in less taxes owed. It is helpful to learn the tax implications prior to purchasing a home or if considering renting vs. owning. This article offers details on tax deductions for owning a property in NC. 

NC Homeowner Tax Deduction Eligibility 

When completing taxes, you may apply the standard deduction or itemize your deductions, whichever results in less taxes. If you own a low priced property, the deductible costs might not add up to more than the standard deduction. Other personal variables might come into play too. An accountant will provide a better understanding of the tax benefits of buying a home by taking into account your specific situation. 

Property Ownership Expenses that May be Used 

Loan Interest 

Only the interest portion of your mortgage payment is tax deductible. In the first few years of owning a property, you get charged higher for interest than principal. As a result, the amount paid towards interest is higher in those first few years. Your mortgage company will mail you a tax form after the end of the year outlining the mortgage interest paid. 

Property Taxes 

Real estate property taxes are also be tax deductible. Property taxes are a yearly amount but are often invoiced in smaller amounts. These taxes are often included in your mortgage monthly payment, but be sure to keep copies of the tax bills sent to you. The total in the statement by your mortgage company are sometimes not accurate, particularly if you closed on the property during the year. 

Mortgage Insurance

If you purchased your real estate within a specific time frame and if you are within a qualifying income bracket, you may be eligible to deduct MI fees. Mortgage insurance is normally charged at closing and monthly for mortgages higher than 80 percent of the home value and remains until the loan amount decreases to a certain level. 

Points and Other Charges 

You should keep the original of your closing statement. Some fees such as points, adjusted real estate taxes, and pre-paid interest could be deductible. Furnish the paperwork to your accountant. 

Tax Deductions For Owning A Property In NC 

The above tax deductions for owning a property in NC is relevant to primary homes. If you bought investment property, the list of deductions vary. This is shared solely as a general introduction. Always consult with a tax professional for expert guidance tailored to your financial situation.