Financial Advantages of Buying a Home if Married
- Married couples do not have to pay taxes on the first $500,000 of their capital gains, or profits, when selling a home they bought together. Unmarried couples may only exclude the first $250,000 of their capital gains from taxation. To take advantage of this tax break, couples must live primarily in the home for at least two out of the last five years and file joint tax returns. The couple must have bought the home after May 7, 1997, to qualify for this tax break.
- As of 2011, married couples can deduct all of their mortgage interest from their taxes if they file jointly and the home is worth less than $1 million. Conversely, single taxpayers only can deduct all of their mortgage interest from their taxes if the home is worth less than $500,000. To qualify for this deduction, the couple must have taken out the mortgage for the purpose of buying, building or improving the home.
- The IRS does not require both spouses to own the home to qualify for home ownership tax benefits. If one spouse owns the home and the couple files a joint tax return, the couple may take all applicable tax breaks related to owning the home. Similarly, the couple may qualify for the exemption on the first $500,000 of capital gains when selling the home, even if only one spouse owned the home prior to sale.
- The IRS limits deductions on mortgage insurance premiums to those with annual incomes of less than $100,000. If you and your spouse together have more than $100,000 in income, you may not qualify for this tax break. However, it is still to your advantage to file jointly because married persons filing separate returns may only make less than $50,000 for the year to qualify for this deduction.
