Of course most people who own have a mortgage due every month. But you should not look at your mortgage as a “bill.” You should think of it as an “investment.”
Every mortgage payment is a “deposit” into your future wealth.
Here are a few ways:
Tax deductible interest*
Your lender will send you a Form-1098 every year with the total amount of interest you paid. This interest is a tax deduction just like a child.
That’s right. Now your house qualifies as a kind of “dependent.” I’m looking at you adults without kids who complain about your annual income tax.
Tax deductible per square foot for work or business*
This one is divided into 3 categories.
a. First, is your personal use of part of your home for work or business. If you use any portion of the space to complete work or business tasks, a portion of your monthly expenses (including the mortgage) are now tax deductible.
b. “Rent” to others for their own tax deductions**
In addition to your own business, approach self-employed folks about having their business mail sent to you. They pay a small monthly fee and have the right to claim that as a tax deduction as “office space” rental.
Why is this acceptable? Because a lot of self-employed people prefer an off-site location for their mail. A lot of folks do their business tasks at coffee shops or at home but having an address separate from home looks better on various documents.
*Just be sure they aren’t putting your address on Google maps. That can be annoying. So have a contract signed that indicates they will not put your address on anything searchable by the general public.
c. Office space rental**
This is a bigger version of “b.” Some floor plans make this possible and some do not. Looking at your current floorplan, is there a room that could function as a “workspace?”
In my first property, there was a large room in the back with it’s own bathroom. There was a door separating it from the rest of the house, making it a perfect office space or studio apartment.
Event rental**
Do you have a large yard? or carport? In places near the shoreline, is your house raised? Do you have a basement?
These are all spaces that you could rent out for gender reveals, birthday parties, baby showers or even, outdoor meetings for businesses.
Imagine AT&T hosting an afternoon retreat in your fenced in yard for seven local employees.
and the biggest of all… Equity
One of the best real estate tips is “buy on the edge.” The edge of what?
The edge of development.
That’s the surest way to gain equity quickly, but almost any property will gain equity in a couple of years. This equity is the biggest wealth asset that is currently under-utilized.
You are able to borrow a portion of the increase in value to invest in anything you want, including education, other real estate, business, home repairs, paying off other debts, etc.
Bonus Option:
Historic tax credits
Properties that are located in historically recognized districts*** and usually over 50 years or older can provide tax credits but if you personally don’t need them, you can sell them to others.
There’s a process of course, but the payoff is well worth it. Companies are willing to pay you for the privilege of using your unused tax credits. It saves them money to pay you instead of paying more in taxes.
(scroll below the image to view more info for those items marked with *)
Disclaimers:
*I am not a tax professional. You should always consult a tax professional or tax attorney for full explanation and guidance on any and all tax related information. I recommend Nola Tax and Accounting in New Orleans - (504) 858-8127
**Check your local zoning requirements to avoid any activities not permitted under your zoning designation. For example, some zoning categories allow a certain percentage of the month to be used for specific activities while other locations may restrict the activity entirely.
***Some properties individually have a historic designation while not in an historic district. Call if you’d like help finding out if your property qualifies.