Top Tax Benefits of Buying a Home in Marin County Before Year-End
As the end of the year approaches, many potential homebuyers in Marin County wonder if it’s worth speeding up their plans to purchase a property. Beyond enjoying the perks of homeownership, buying a home before December 31 can bring substantial tax benefits that could impact your finances positively this tax season. Here’s a breakdown of the top tax advantages of buying a home in Marin County before year-end.
1. Mortgage Interest Deduction
If you buy a home before the year ends, you can deduct mortgage interest payments on your taxes. For Marin County buyers, where home prices are high, this can mean big savings.
How It Works:
When you close on a home by December 31, you might be able to deduct interest paid on your mortgage in 2024. The IRS allows this deduction on loans up to $750,000 for married couples filing jointly ($375,000 if filing separately).
Example:
If you buy a Marin home in December, the interest on your December mortgage payment may lower your taxable income and save you money.
2. Property Tax Deduction
Marin County property taxes can be steep, so deducting these payments is a valuable perk for homeowners.
How It Works:
You can deduct up to $10,000 in state and local property taxes as a married couple filing jointly ($5,000 if filing separately). If you close on a home in Marin before December 31, you might be able to deduct property taxes paid at closing or through your mortgage payments in 2024.
Example:
If you close in November, property taxes paid as part of your closing costs can lower your taxable income for 2024.
3. Mortgage Points Deduction
If you pay mortgage points to lower your interest rate at closing, you may also get a tax deduction.
How It Works:
Mortgage points (or discount points) are upfront payments that reduce your loan's interest rate. The IRS allows you to deduct points if the loan is for your primary home.
Example:
Paying $3,000 in points when buying a Marin home could reduce your taxable income by that same amount on your 2024 taxes.
4. Private Mortgage Insurance (PMI) Deduction
If your down payment is less than 20%, you may need PMI. Qualifying homeowners can deduct PMI payments, which is especially helpful in Marin’s expensive market.
How It Works:
If your household income is under $109,000 as a couple ($54,500 if filing separately), you may deduct PMI payments. Closing before year-end makes you eligible to deduct any PMI paid in 2024.
5. Energy-Efficient Home Tax Credits
Some Marin homes come with eco-friendly upgrades like solar panels or energy-efficient windows. These features may qualify you for IRS tax credits.
How It Works:
Energy-efficient tax credits directly reduce your tax bill. Credits apply to features like solar panels, energy-efficient windows, doors, and roofing. A tax advisor can confirm if your new home qualifies.
6. Long-Term Capital Gains Exclusion
While this isn’t an immediate benefit, buying now starts the clock on a major future tax break. If you sell your home later, you may avoid taxes on a portion of your profits.
How It Works:
If you live in your home for two out of the last five years before selling, you can exclude up to $250,000 in profits from taxes if single, or $500,000 if married filing jointly. This is a huge advantage in Marin’s appreciating market.
Tips to Maximize Your Marin Tax Benefits
Close Before December 31: This makes you eligible for deductions like mortgage interest, property taxes, and PMI for 2024.
Save Your Records: Keep all documents related to your home purchase, such as closing statements and tax bills.
Talk to a Tax Pro: A local expert can help you make the most of these tax perks.
