At the end of 2023, according to Freddie MAC, 30-year income-indexed mortgage rates were near 8 percent, putting the brakes on many interested home buyers, with high interest rates curbing their ability to buy. Now with inflation cooling and 30-year rates hovering around 6 percent, Wall Street analysts expect the Fed to cut rates on Sept. 18, which could lower mortgage rates even more.
But because there is a severe shortage of homes and demand outstrips supply, cheaper mortgages mean more people are bidding on properties, leading to another wave of foreclosures.
Shark Tank’s Barbara Corcoran told Bloomberg Television on Aug. 13 that lower mortgage rates will spur “tremendous demand.” Because if rates go down a little more, she said, it “puts everybody in the market and you’re paying more for a house.”
Barbara says the entry-level housing market is going to be “crazy.” “The bidding is so intense, the prices are so high, and people are scared because they don’t think they can succeed.” That’s why waiting to buy may not bring you the win you want.
“Wait until rates drop another percentage point and you’ll see what happens to prices,” she said, adding that buyers have a variety of options. They can wait and try to time the market (as many other home buyers do). Or they can step in now, be willing to take some short-term pain, and then, if mortgage rates do fall, consider refinancing: that is, refinancing to lower the cost of the loan. This is very doable.
If you have the money and can afford a mortgage at current rates, it may make sense to get into the market right away before demand spikes. If the house price goes up, you will get an appreciation of the house.
Whether you are a first-time homebuyer, a long-time homeowner, a homeowner who has applied for a re-loan, or a homeowner who is selling, all have the opportunity to obtain relevant tax benefits through the house. For the average family, the easiest way to get back more than the Standard Deduction is to claim the property-related tax benefit as an Itemized Deduction. But other expenses, such as donations, are less likely to be taxed than real estate.
Whether it’s for charitable contributions or medical expenses, it’s not easy to get such a favorable deduction or even exceed the standard deduction. However, housing-related tax credits can often easily exceed the standard deduction, giving taxpayers a larger refund. Here are seven important housing-related tax credits for homeowners’ reference.
1) Mortgage interest
American homeowners receive up to $100 billion a year in mortgage interest tax credits, and taxpayers who bought homes in the past few years or applied for refinancing should have a higher percentage of their monthly mortgage payments in mortgage interest, which can save more taxes.
2) Mortgage insurance costs
The credit is important for low-income homeowners, who often cannot afford to pay down high mortgage payments and must purchase personal mortgage insurance before their home equity rises to 20 percent, which can be used as a tax deduction.
3) Building insurance and Marine insurance
Home insurance and Marine insurance purchased (such as in flood areas) are also eligible for tax credits.
4) House tax
Real estate tax credit is a real but often overlooked tax credit. Homeowners pay local and state taxes that can be used to deduct federal income taxes. If it is a home, 10,000 yuan per family property tax credit. The land tax of the investment property can be fully deductible. Depending on the state or local government, homeowners with incomes below a certain threshold may also qualify for a special home tax credit. Consult your accountant.
5) Energy-saving repair costs
Improvements that typically improve the energy efficiency of homes are also eligible for tax breaks, including the installation of solar panels, energy-efficient water heaters, etc., and modifications based on medical needs: such as installing wheelchair ramps in front of homes, building stairs inside homes, and making bathtubs and other equipment accessible to people with disabilities are eligible for tax credits or tax breaks.
6) Renovation costs and owner-occupied
housing of 250,000 yuan per person and 500,000 yuan for couples
The cost of the renovation of the house can be used to offset the tax burden of selling the house in the future when it is sold, according to the Internal Revenue Service, the owner of the self-owned house is sold when meeting the time regulations of the tax authority, the first 250,000 yuan of the value of the property (each person) and the profit of 500,000 yuan of the couple are not taxed, and the cost of the previous renovation of the house can also be used to offset the profit. These tax benefits are unmatched by other investments.
7) Expenses related to selling the house
In addition, there are opportunities to deduct the costs associated with the sale of the property, such as title insurance, advertising for sale, real estate brokerage fees, etc. Repairs paid by the homeowner in the 90 days prior to the sale can also be claimed against capital gains taxes, as long as they can be shown to have been made to help enhance the sale of the home
