Jeni VanOrnum | Real Estate Insights & Education

Tax benefits can significantly reduce the cost of homeownership. I’m Jeni VanOrnum, your Douglas County real estate agent, and today I’m explaining the tax credits and deductions available to first-time homebuyers in Colorado in 2023.

Mortgage Interest Deduction

The biggest tax benefit is deducting mortgage interest paid. You can deduct interest on loans up to $750,000 (married filing jointly). In your first years of homeownership, most of your payment is interest, creating substantial deductions that can save thousands annually on your tax bill.

Property Tax Deduction

You can deduct up to $10,000 in state and local taxes (SALT), including Douglas County property taxes. While this cap limits high-income earners, most first-time buyers benefit fully. Douglas County property taxes are relatively reasonable compared to many areas.

Mortgage Credit Certificate (MCC)

Colorado’s MCC program provides a federal tax credit for a portion of your mortgage interest—not a deduction, but a dollar-for-dollar credit. This can be worth $2,000+ annually. Income and purchase price limits apply, but many Douglas County first-time buyers qualify.

First-Time Homebuyer Savings Account

Colorado allows first-time buyers to open tax-advantaged savings accounts. Contributions are deductible from Colorado income tax (up to $2,525 single, $5,050 married), and withdrawals for qualified home purchase expenses are tax-free. Start this account even before you’re ready to buy.

Energy Efficiency Credits

If you make energy-efficient improvements (solar panels, heat pumps, insulation), federal tax credits can offset 30% of costs. Colorado offers additional state incentives. Even as a first-time buyer, planning for these upgrades can provide significant savings.

Points Deduction

If you paid points to lower your interest rate, you can typically deduct them in the year you purchase (for your primary residence). On a $400,000 loan, one point ($4,000) creates a $4,000 deduction.

No Capital Gains Tax (Future Benefit)

While not immediate, when you eventually sell your primary residence, up to $250,000 in gains ($500,000 married) is tax-free if you’ve lived there two of the last five years. This future benefit rewards homeownership.

Consult a Tax Professional

Tax situations vary. Work with a CPA familiar with Colorado real estate to maximize your benefits. Ready to buy your first home and capture these tax advantages? Contact Jeni VanOrnum today.