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Tax benefits to homeowners |
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What tax benefits are there toNorth Charleston area homeowners?
Homeowners benefit from several generous tax advantages. The most important benefit is the mortgage interest deduction. People may deduct interest paid on mortgage loans totaling up to $1 million used to buy, build or improve a principal residence plus a second home. The IRS calls such loans acquisition debt.
Points paid by the buyer or seller on a new mortgage loan for the purchase or improvement of a principal residence are deductible for the year in which the home was purchased.
Any points paid on a refinance mortgage, a loan to purchase a second home or a mortgage on income property must be spread over the life of the loan, according to Edith Lank and Miriam S. Geisman, authors of "Your Home as a Tax Shelter," Dearborn Financial Publishing, Chicago; 1993.
Note that when obtaining a new mortgage, the borrower usually is asked
to pay interest from the closing date until the first of the next
month. Check whether that charge is included in the year-end report.
Property taxes on all real estate, including those levied by state and
local governments and school districts, are fully deductible against
current income, say Lank and Geisman.
"A homeowner cannot deduct maintenance expenses, nor can he take
depreciation deductions on his personal residence," states the "Realty
Bluebook," 30th Ed., Dearborn Financial Publishing, Chicago; 1993.
Some moving expenses are deductible for people who changed jobs and
relocated as a result. The IRS requires that the new employment be
located at least 50 miles away, among other considerations, said
Analisa Collins-Sears, a public affairs officer with the IRS' Bay Area
office.
Resources: * "Tax Information for First-Time Homeowners," a free guide
published by the Internal Revenue Service. Order by calling
1-800-TAX-FORM.
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Last Updated ( Thursday, 04 September 2008 )
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