Monday 20 June 2011

LET'S TALK TAX STILL The Best Tax Shelter Around — Your Personal Residence!



With today's economy many homeowners are struggling to make ends meet. If you are a homeowner, you may recognize the above. But home ownership is still one of the best investments that can be made. In fact, Uncle Sam has thrown you a tax shelter that is beyond compare. May you deduct mortgage interest paid on your loan and deduct property taxes paid in the state. These deductions are based on being able to itemize your deductions on your tax return.

If you do not currently own a home, this tax is a significant advantage enough to make you look seriously at home ownership. There are, of course, exceptions to every deduction. One of the complexity of home ownership tax deductions surrounding points.

as "Count", the deductible?

Points are one type of charge to close to your lender. If you pay points when you buy your new home, you can be fully deducted in the year of acquisition. However, if you refinance your loan, then the points must be deducted over the life of a new loan. In the event that you are deducting points per year, and then decide to refinance again, you will be able to refuse to pay the balance point when the old mortgage.

There are some limitations:

    points should not be more than the amount generally charged in your area. Funds provided to the closure must be at least equal points. the loan must be used for the purchase or construction of major local taxpayers. Points are given as a percentage of the amount of loan principal. points clearly indicated on the settlement statement as charges for a mortgage.

Limits on Mortgage Interest Deduction

Predictably, there are restrictions on the mortgage interest deduction. Only the interest on the first $ 1 million home acquisition debt is deductible. (Acquisition debt is defined as debt to buy, build or substantially improve the residence.) Home equity debt limit less than the fair market value of the home minus the acquisition of debt or $ 100,000 ($ 50,000 if married filing separately).

the biggest tax advantages of homeownership

Probably the biggest advantage of home ownership occurs when you decide to sell your home. If you have lived and owned a personal residence for two out of five years, you can sell the house and are not taxed on income up to $ 250,000 for singles and $ 500,000 for couples. This rule seems to be very straight forward and simple, but beware, there are many exceptions.

work to move -if you have to move from their area (50 miles) and are unable to meet the two year period, can be proportional to time based on a formula using the ratio consists of a number of days that owned and lived in a house on the total number of days in the relevant 24-month period (c. 730), multiplied by the exclusion amount.

health problems require a sale- if health problems forced him to move from your principal residence, can be proportional to time on and off based on the formula above.

Ideally, a couple who kept good records of time to buy property and live in the house for two years, sell it for profit, and then repeat this procedure. However, there are many pitfalls that cause tax problems, such as special rules surrounding home office and move / rent / return situations that affect the two five conditions (this includes setting up depreciation recapture). Given the many rules and nuances of tax laws, many people opt to hire a licensed tax professional, such as the registered agent.

When you consider the possible gain from the sale of the house, and tax breaks that the government makes available to you, homeownership is still one of the best investments you can make.


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