Real Estate - Tax Advantages
Tax time will be here before you know it. This year you can be glad you bought real estate because your residence can offer one of the best tax deductions. The IRS looks favorably on owning real estate and they provide a number of tax benefits for home owners.
The largest deduction is the interest you pay on your home mortgage. If you have a $1200 a month mortgage payment and 80% goes towards the interest, you can deduct, depending on your tax bracket, up to $11,500 a year. That's not bad considering you are also building up equity in your home. Real estate property taxes are also deductible, as well as certain loan origination fees or points.
* If you have to make permanent home improvements because of a medical condition, such as installing air conditioning, a swimming pool, handicap ramps - these expenses may be partially deductible.
* Moving Expenses - If you move 50 miles away, you can deduct the cost of moving yourself, household goods and vehicles to your new location.
* Land - Even the land your home is on could be deductible. IRS Section 163 allows lease payments for land under a home to be deducted. The ground lease must be for at least 15 years including renewal periods, be freely assignable, and contain a future option for you to buy the leased land.
* Home Office - Building and working from a home office can also qualify you for a tax break. You must use the homes area designated as an office exclusively for business. People who work from home are also entitled to deduct a portion of their homes expenses, such as utilities, insurance and the security system.
Sherie says: Remember, I'm here to guide you through the entire real estate process!
