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REFINANCE Now! Consolidate Debt!!
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Your home may be brimming with tax advantages. How will you get all of the breaks
you're entitled to? You should always consult a professional tax advisor for details,
but here's a list of the top 10 deductions:
1. Mortgage Interest
Interest on the loan for your primary residence is fully tax-deductible, if you
qualify.
2. Points Paid on a Refinanced Loan
If you refinanced, you may be able to write off the points paid for the new loan.
But, there's a twist: you'll have to deduct them proportionately over the life of
the loan. So, if your new loan has a 30-year term, you'll deduct 1/30th of your
points each year.
A couple of things to consider: If you've refinanced before, and you have
points from the previous refinance that you haven't finished deducting, you can
write off the rest of those points in the year you refinance.
3. Points Paid on a Purchase Loan
The points you pay at closing when you buy a home are deductible on your income
tax statement for that year. If the seller paid some (or all) of your points for
you, you may be able to deduct those seller-paid points.
4. Capital Gains with No Income Taxes
Thanks to the 1997 Tax Act, once every two years, single homeowners can realize
a tax-exempt profit of up to $250,000 - as long as the seller owned and occupied
the home as a principal residence during any two of the last five years. Married
homeowners who file jointly on their tax returns do not have to pay taxes on up
to $500,000 of gain when they sell their primary residence.
5. Home Improvements
Although you can't deduct the expenses associated with home improvements, keep in
mind that making improvements to your home may increase the purchase price of your
home. Keeping all of your receipts from home improvements may help you prove your
home's worth at resale and reduce the potential taxable gain when selling your home.
6. Real Estate and Property Taxes
State and local property taxes can be deducted as an expense against income. However
the real estate taxes are only deductible in the year they are actually paid to
the government.
7. Home Offices
If you have a qualified office in your home, you may be able to deduct costs associated
with maintaining the portion of your home exclusively used for business. For example,
100% of your expenses related to the office such as painting and upkeep are deductible,
as well as a portion of indirect expenses such as the cost of utilities and garbage
pickup.
8. Limited Moving Expenses
Homeowners who have recently relocated for work may be able to write off the cost
of moving themselves, their household goods, their vehicles, and other reasonable
costs associated with the move. Restrictions do apply. For instance the new job
must be 50 or more miles farther from the old home than the old job was.
9. Health-Related Improvements
Any home improvements for medical purposes can be deducted entirely from your taxes
as long as the improvements do not add to the overall value of the home and have
been made for a chronically ill or disabled person. If you qualify, you may be able
to deduct a portion of expenses such as a swimming pool for treating polio victims
or an air conditioner to alleviate a specific medical condition.
10. Vacation Homes
Owning a vacation home has more benefits than you may think. You can deduct some
of the costs associated with owning a vacation home, such as real estate taxes,
personal property taxes, mortgage interest, and points.
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