Home Owners – Collect S From The Government!
First time home owners may not realize all the tax breaks that are possible options for them just by paying a mortgage instead of rent! In fact there are so many tax breaks available it seems as if the government should owe us home owners money!
Even old timers who own a home may want to read on as the government has recently introduced yet one more tax break for all home owners; this newest one is called the Mortgage Forgiveness Debt Relief Act of 2007.
There are already several tax incentives out there for home owners. The capital gains i.e. profit that you make on the sale of an asset are usually tax deductible but in the sale of your home this has been waived by the Tax Relief Act of 1997.
Before this law came into effect homeowners could claim capital gains exemption only once in their lifetime no doubt this stems from the ‘good ole days’ when everyone bought a home and stayed in it until they died!
Now however in these days of frequent house moves the government lets you sell your home and make a profit which you can keep! However if you make an enormous profit you have to share some with the tax department but the limit is very generous.
You can keep any profit of up to 250000 if you are single or 500000 as a married couple after that the profit over and above the original cost etc. is taxable.
Mortgage interest is also tax deductible for a mortgage debt of up to 1 million that should cover most of us! Also the Mortgage Forgiveness Debt Relief Act of 2007 allows you to deduct your mortgage insurance interest. Wow! Surely the government owes us home owners money by now?
But wait there’s more! If you and your spouse if you have one earn less than 100000 gross per annum you can also deduct PMI from your tax bill. This is especially helpful for families who bought home with less than a 20 down payment; they can deduct PMI until 2010.
All these tax breaks add up to several bucks and when you add that to the equity that can be made on a home it’s a good deal. On top of everything else the mortgage interest rate is low low low and right now it is a buyer’s market i.e. the price is right.
However these days it must be agreed that you should plan to buy only if you think you can stay in the home for a few years in order to allow the equity to build up.
Some homeowners who have a federally insured loan may qualify for the deduction of their property taxes on their federal income tax return. Also ‘points’ that are paid to take out a mortgage are tax deductible up to 1000.00. This counts as a tax deduction whether you or the seller paid.
Come on are you still reading this? How many more breaks do you want? Get out there and start looking 80 of all prospective home buyers start on the Internet so just keep clicking!
About the writer: Louise Scoggins is a REALTOR with expertise in Atlanta Georgia real estate. For more information on Cherokee County real estate or other Atlanta properties contact Louise with Explore Atlanta Homes.
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