Real Estate is Still the Best Tax Benefit for Homeowners. By Melvin Burrell
Robert Smith and Associates
December 07, 2007
www.capitalloanspecialists.com
Because of the declining real estate market, it is easy to lose site of the many benefits of homeownership. One key benefit is the tax breaks noted in this article.
The Federal government has a long tradition of promoting homeownership. That is why over 60% of all households in the United States now own the home they occupy. Federal policy makers realized sometime ago that homeownership helps provide the foundation of social, economic, and political stability necessary for a free society to function. The purchase of a home is the largest investment most people make in their lifetime. Homeowners are motivated to protect and maintain their property. Homeowners have a strong incentive to maintain employment, establish income producing businesses, and become involved in community affairs.
The tax benefits of homeownership are the deductions that lower taxable income. The deductions are interest paid on mortgage loans and property taxes. When a home is purchased the buy down points charged by the lender are tax deductible the year of the home is bought. Other closing or settlement costs are added to the property base cost and become a tax break when the home is sold.
Another tax break that comes with the sale of a home is the exclusion of capital gains. The purchase of real estate is an investment that grows over time. Value of real estate naturally increases over time plus certain improvements increase the value. When a
home is sold the difference between the purchase price/base cost plus improvements and the sale price is called capital gains. Capital gains are taxed however; there is a tax exclusion of $250,000 ($500,000 for a married couple filing jointly).
Homeowners who work from home may deduct a portion of their utilities, home insurance, property taxes, mortgage interest, and repairs as business expenses. They can even get a tax break for depreciation on the business portion of their home. Additional rules apply so contact a tax professional before taking this deduction.
For additional information on tax benefits for owners of real estate call Melvin Burrell at 800-208-8121 or email at MelvinB@caploanreallty.com or visit www.capitalloanspecialists.com and
capitalexecutiverealty.com
Because of the declining real estate market, it is easy to lose site of the many benefits of homeownership. One key benefit is the tax breaks noted in this article.
The Federal government has a long tradition of promoting homeownership. That is why over 60% of all households in the United States now own the home they occupy. Federal policy makers realized sometime ago that homeownership helps provide the foundation of social, economic, and political stability necessary for a free society to function. The purchase of a home is the largest investment most people make in their lifetime. Homeowners are motivated to protect and maintain their property. Homeowners have a strong incentive to maintain employment, establish income producing businesses, and become involved in community affairs.
The tax benefits of homeownership are the deductions that lower taxable income. The deductions are interest paid on mortgage loans and property taxes. When a home is purchased the buy down points charged by the lender are tax deductible the year of the home is bought. Other closing or settlement costs are added to the property base cost and become a tax break when the home is sold.
Another tax break that comes with the sale of a home is the exclusion of capital gains. The purchase of real estate is an investment that grows over time. Value of real estate naturally increases over time plus certain improvements increase the value. When a
home is sold the difference between the purchase price/base cost plus improvements and the sale price is called capital gains. Capital gains are taxed however; there is a tax exclusion of $250,000 ($500,000 for a married couple filing jointly).
Homeowners who work from home may deduct a portion of their utilities, home insurance, property taxes, mortgage interest, and repairs as business expenses. They can even get a tax break for depreciation on the business portion of their home. Additional rules apply so contact a tax professional before taking this deduction.
For additional information on tax benefits for owners of real estate call Melvin Burrell at 800-208-8121 or email at MelvinB@caploanreallty.com or visit www.capitalloanspecialists.com and
capitalexecutiverealty.com
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