Buying a home for the first time can give homeowners an immense amount of joy. There is no better feeling than moving out of a rented apartment and moving into a house with your name on it. It is a dream of many people that they accomplish after years of saving up. However, it is also important to understand the tax implications that come with such a big purchase. 

If you are from California, you are in luck; first-time homebuyers in California enjoy various tax credits and benefits. These were designed to lower the financial burden of homeownership. Unfortunately, most people end up paying thousands of dollars in taxes as they are unaware of the advantages they are entitled to. Do not let that be you. 

Tax laws are not only complicated to understand but frequently subject to change. It pays off to work with a financial expert equipped with state and federal law knowledge, such as a CPA in Roseville, California, and a tax advisor. With the help of the available deductions for California homeowners, you will be able to save enough to buy furniture for the new house!

Tax tips for first-time homebuyers in California!

You are eligible for a first-time homebuyer tax credit

California first-time homebuyers are in luck because they are eligible for a tax credit of up to $10,000. However, there are certain criteria for qualifying for this credit. For instance, you must purchase the property in California. You cannot be a citizen of California and buy a house in Florida to claim the credits. Additionally, there are purchase price limits as well. 

You would be happy to know one more great fact about this particular credit. If the $10,000 tax credit exceeds your tax liability, you will receive the difference as a tax refund. Therefore, this can help you with other expenses associated with buying a new home, including furniture, lighting, painting, etc. 

You can deduct mortgage interest from your taxes

As a new homeowner, you must know that you are supposed to pay taxes on your mortgage interests as well. However, if you are a first-time homebuyer in California, you can add these deductions to your list. For any loans that originated after December 16, 2017, homeowners can deduct the interest paid on a mortgage of up to $750,000. 

This is a substantial deduction and can greatly reduce your taxable income. This is particularly beneficial for those first-time buyers with large mortgage obligations. 

You are eligible for property tax deductions

Another tax benefit of being a first-time homeowner in California is being able to deduct property taxes people usually pay on their homes. You can deduct local property taxes up to an amount of $10,000 every year. This deduction will apply regardless of whether you have paid your taxes directly or through an escrow account. 

You can deduct your mortgage insurance premiums

Homeowners who pay a down payment of less than 20% are often required to get mortgage insurance and pay premiums monthly. You may be able to deduct these premiums from your taxes. This deduction can be particularly valuable to first-time homeowners because it helps them save enough for their next payments. 

You can get penalty-free IRS withdrawals

First-time homebuyers are eligible to withdraw up to $10,000 from their IRAs without incurring the typical 10% penalty. However, the criteria is that they must use the funds to purchase or build their first home. 

Protect your finances when buying a new house!

Buying a first home for yourself and your family is an out-of-the-world feeling. On top of that, you get a number of credits and benefits that help you save money. You can use this money to decorate your new house. To avoid missing out on any of the benefits, hire a CPA in California today!