When looking for a home on Cape Cod, there is always the debate “should we buy or rent?” Some insist that renting is the way to go, because you don’t have to deal with maintenance of the home.
Whether you’re looking for a summer home in Chatham, or looking to live year- round in Sandwich, the tax benefits of buying a home surpasses the advantages of renting. The freedom of packing up your favorite boat shoes or your new bathing suit whenever you please and escape to the Cape is a feeling like no other.
Purchasing a home is a great investment, and it gives you greater tax advantages as compared to renting. Here are some of the tax advantages for either scenario.
Tax benefits for renters
- In case of damages due to fire, theft or flood, you can deduct property losses as long as you aren’t compensated by insurance companies.
- If you own your business and a portion resides in your rented home, you can deduct the amount of rent represented in the workspace you use.
Tax benefits for homeowners
- As a homeowner, you can deduct the mortgage interest spent on your home that year. Your lender will send you a 1098 form so you can claim any tax paid that year.
- You can deduct the real estate taxes you pay each year. The amount will be shown on the form sent by your lender. Deducting these property taxes is a huge plus for homeowners.
- If you have a retirement IRA, first time homebuyers are eligible to break into the IRA penalty free when using the money as part of a down payment on a home.
- Save all your receipts for home improvements such as landscaping, storm windows, new fences or add-ons. You cannot deduct these expenses now, but later when you sell your home, these expenses will be put back into your pocket.
- Some energy saving additions or improvements to your home can give you a tax break worth up to $500. Replacing your appliances with energy saving options along with adding insulation are a few ways you can save energy in your home and get a credit on your taxes.
Purchasing a home saves money in the end
There are countless monetary benefits of buying a home, but the memories you will make with family and friends on Cape Cod is priceless. Purchasing a home means investing in your future, your children’s future. From spending afternoons with family and friends at the National Seashore (and getting much more sun than bargained for), to ending the day at your favorite ice cream parlor, your Cape Cod home is calling you back.