Often Overlooked Real Estate Tax Breaks
I know it's not the tax season yet and we just want to give out an early reminder for everyone. Tax season can put you under a lot of stress and we can forget important things to include, especially if you are doing it few weeks before the deadline and or if you are doing it on your own without any help from a CPA.
This is just a short and friendly reminder that days go by REALLY FAST and the next thing you know it's the tax season already. If you know anyone who just bought or sold a home this year tag them and may this serve as a reminder for everyone for next year's tax season.
1. Do not forget to include your mortgage interest deduction.
The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people, this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
2. Do not forget to Deduct your property tax.
Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.
3. Deduct your Closing costs:
The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
4. The Capital Gains Exclusion.
If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.
5. Tax Deductions on Home Equity Lines.
In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the horrendously exorbitant credit card interest rates, and get a deduction on the interest as well.
- Read More at http://www.forbes.com
I would still recommend talking to a CPA for some clarity. After all, there are still some exemptions and they can help you with that.