One of the most useful
yet widely misunderstood benefits of homeownership is tax deductions. Tax
deductions are a welcome gift from the government, but if you're renting, they
benefit your landlord, not you.
Property tax deduction:
Any money you paid during the year you purchase and in the years afterward to
local state, county and city property tax assessors is tax
deductible.
Mortgage interest deduction:
Your mortgage
interest on both first and second liens is tax deductible. Any points you
paid to obtain a lower interest rate are deductible. Private mortgage insurance
payments are also deductible.
Closing costs: Some fees
to the mortgage lender are deductible. Ask your tax professional for guidance.
You can deduct some moving expenses, such as items for home offices. Save your
Hud-1 form and show it to your tax professional.
Home office deductions:
If your home is your principle place of business, and you meet other IRS
guidelines for home businesses, you can take a deduction
on workspace dedicated to your business and no other purpose. You can also
depreciate that portion of your home over 39 years. All improvements to the
workspace are tax deductible. In addition, your security expenses, phones,
internet costs, computers, insurance, and utilities can be deducted or
depreciated according to IRS allowances. Percentages and limits apply, so talk
to your tax professional.
Energy Star: If you
purchased an energy efficient system or appliance for your home and it meets
government Energy
Starstandards, you may deduct a portion of your expenses. Save your
receipts.
Property sales
deductions: If you purchased a home today, occupied it as a primary residence,
and sold it in two years, you could be eligible for some capital gains exclusions
up to $250,000 if you're single, or $500,000 if you're married. You can even
live in the home two years, rent it out for three years, and still enjoy the
capital gains exclusion.
There may be many other
deductions out there for you to take advantage of that are associated with your
home, so save all receipts throughout the year for repairs, parts, purchases,
remodeling, etc. Some allowances and special circumstances apply, so before
taking this exclusion, be sure to talk to your tax professional.
Save your tax records up
to seven years, because you have to be able to support the deductions you take
with documentation such as receipts, credit card statements, cancelled checks,
and online banking. Make sure you take deductions and depreciation only for
legitimate items.
Remember all the
benefits you could be getting in deductions, your landlord is currently enjoying
while billing all costs associated with managing the home to you. Wouldn't you
rather do that yourself?
By Blanch Evans,
Realtytimes.com
Courtesy of First Choice
Title Services & Escrow, Inc.
First Choice Title Services &
Escrow, Inc
3
SW 129th Avenue, Suite 202
Pembroke
Pines, FL 33027
Phone
(954) 433-7680
Fax
(954) 433-7355
maria@firstchoicetitleservices.com
maria@firstchoicetitleservices.com
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