Your Home Sold Guaranteed Realty - Reeds Real Estate

Are There Tax Benefits to Owning Real Estate as a Veteran?

owning real estate as a veteran

Wondering what the tax benefits are to owning real estate as a veteran? If you’re in the market to buy a new home, there are a number of ways you can save money on your taxes and mortgage as a veteran.

To take advantage of the best options for your situation, you’ll need to work with a realtor who specializes in working with veterans. In this post, our realtors at Your Home Sold Guaranteed Realty - Reeds Real Estate will discuss several ways you can save money through homeownership as a veteran. 

What Are The Tax Benefits of Owning Real Estate as a Veteran? 

Owning real estate as a veteran comes with many of the same tax benefits as it does for conventional home buyers. However, there are also some unique advantages available only to veteran buyers. Below, we’ll cover four of the most common tax deductions.

1. Mortgage Interest

All home buyers can deduct mortgage interest payments from their tax bill as long as they pay with a qualifying home loan. Fortunately for veterans, a VA home loan qualifies for this deduction.

Your mortgage interest payments are deducted from your taxable income. To take advantage of the deduction, you’ll have to choose the itemized deduction rather than the standard deduction. 

It’s also important to note there are some limits to mortgage interest deductions. Married couples filing jointly can deduct mortgage interest as long as their mortgage debt is $750,000 or less. For single filers or married couples filing separately, that amount is $375,000 or less.

2. Closing Costs 

Closing costs are another deduction available to both veteran and non-veteran home buyers. Deductible costs include: 

  • Origination fees. A lender charges origination fees to cover the cost of processing a loan application. It is typically expressed as a percentage of the total loan amount, ranging from 0.5% to 1% or more.
  • Mortgage discount points. Mortgage discount points are paid to a lender in exchange for a lower interest rate on a mortgage. Each point typically costs 1% of the total loan amount and lowers the interest rate by a certain percentage, usually 0.25%.
  • Mortgage insurance. Private mortgage insurance (PMI) is usually required for home buyers who can’t afford a down payment of at least 20%. However, the VA doesn’t require mortgage insurance to take out a VA home loan. So as a veteran, you won’t have to worry about deducting it from your tax bill.

As a veteran home buyer, the VA funding fee is one unique closing cost you can deduct from your taxes. The VA charges this fee to fund the VA home loan program. 

The exact cost is determined by the type of loan, the down payment amount, and whether the borrower has used the VA home loan benefit before. The fee can be rolled into the loan amount or paid upfront at closing and usually ranges from 1.4% to 3.6%.

3. Moving Expenses

If you’re an active duty service member required to move due to Permanent Change of Station orders, you can potentially deduct some of the expenses from your taxes. Typically, your military allowances will cover most of the costs associated with moving.

But moving expenses that remain unreimbursed can potentially be deducted from your taxes, though you’ll need approval.

Some of these costs include:

  • Storage fees
  • Vehicle shipment costs
  • Pet transportation costs
  • Packing supplies
  • One night’s lodging at your old location if you already moved your furniture 
  • First night’s lodging at your new location

4. Property Taxes 

Property taxes are deductible for most home buyers if they choose an itemized deduction. But one of the benefits of owning real estate as a veteran is that you may be exempt from paying property taxes. 

Whether or not you qualify depends on your location and disability rating. All 50 states and Washington D.C. offer some type of property exemption. But the exact amount can also vary based on your county and city.

Qualifying disability ratings range from 50% to 100%. However, some states allow veterans over the age of 62 to qualify instead of having a disability. 

Keep in mind that you’ll have to reach out to your local tax authority to request the exemption, and you may have to renew it at the end of each year.

Buy a Home in Chesapeake, VA, With Our Realtors

If you’re a veteran home buyer looking to live in Chesapeake, Virginia, contact Your Home Sold Guaranteed Realty - Reeds Real Estate. Our team is veteran-owned and operated, so you can be sure you’re getting care from a realtor who knows what they’re talking about.

We’ve helped thousands of veteran home buyers navigate the home-buying process, and we know we can do the same for you.

Our clients love working with us because of our focus on customer service, exceptional communication skills, and unique buyer guarantees.

This includes our Buy it Back Guarantee, which ensures you’ll love your new home. If you aren’t satisfied with it for any reason, we’ll buy it back ourselves.

To learn more about buying a home with our team, give us a call at (757) 799-4824. You can also fill out the form below for more information.

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