Long Beach Housing Market

Is it tax time again - you betcha!
March 3rd, 2011 2:24 PM

I send out a newsletter to my clients and the current issue has information about tax deductions.  As a reminder here are some tips.  Be sure to talk to your tax professional about your personal situation.

Mortgage Interest
Your biggest tax break comes from writing off your mortgage. If your loan totals more than $1 million, the IRS limits how much of your paid interest can be deducted. Interest paid on mortgages for a second home is also deductible, as long as the combined total of both loans is less than $1 million. The second mortgage is not limited to just houses; it can also include an RV or boat, as long as it has cooking, sleeping and restroom facilities. Additionally, you can even rent out your second property for part of the year and still deduct the mortgage interest on the loan. Just make sure you spend at least 14 days per year or more than 10% of the number of days that you rent it out (whichever is longer) at the second home. If you don't the IRS will consider the property to be a residential rental property and the interest will not be deductible! My favorite item - you can deduct the interst on your motor home or boat???? Dang that's great.  On the other hand a second home, Hmmm does that mean it's time to talk to me about Palm Springs property - make a note - call Heather.

Property Taxes
Another major money-saving write-off is property taxes. This amount should be included on the annual statement you get from your lender, along with your loan interest information. These taxes can be an annual deduction as long as you own your home.

Other things to consider
If you paid points to get a better rate on your home loan, these can also be deducted. The IRS lets you deduct points the same year you paid them if the loan is used to purchase or build your main home. If you sell your home you will be able to avoid paying taxes on the profit you make from the sale. A homeowner can gain up to $250,000 (or $500,000 for married joint filers) tax-free as long as the homeowner owned the property for two years and lived in it as a primary residence at least 2 of the previous 5 years.

Remember, call a tax professional to get information about your personal property.

Posted in:General
Posted by Heather Burke & Sarah Ireland on March 3rd, 2011 2:24 PMPost a Comment

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