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[H520]Home Improvement Tax Deductions

by Alex Peterson, Ale

Mortgage interest is probably the most important for homeowners and many home owners may be already be aware of this important tax benefit. Homeowners can deduct the interest payment for their first or second home loan as long as it isn't over the fair market value of the home. If you're married filing separately it can't exceed $500,000 for single returns and $1 million for joint filers. You'll be limited with home equity loans of $100,000 or more with married couples and $50,000 for single filers. Late charges and prepayment penalty fees can be deducted with the interest.

The refinancing epidemic reached its peak some time ago but you still may be able to purchase points that will lower your rate and make refinancing worthwhile. You can write off the purchase of points for a lower rate on a new loan. Many homeowners miss out on this important opportunity to deduct unclaimed points from a previous refinancing the same year.

Points have to be deducted “proportionally” over the life of the loan. If the terms of your new loan are for 15 or 30 years you deduct 1/15th or 1/30th of your points every year. The points you purchased for the previous loan are paid off with the new loan and can be written off completely. You continue to make the proportional deductions for the new term of the loan.

Interest paid for home equity loans or lines of credit work very much the same way. Homeowners can deduct the interest paid on either, up to $100,000. They only run into problems when the home equity loan exceeds more than what the home is worth. If your first mortgage is for a $160,000 and you take a home equity loan of $35,000 for a property valued at $180,000 you can only deduct interest on $20,000, the real value of the property.

Taxable and non-taxable gains are in an area most homeowners aren't familiar. If there is uncertainty a tax advisor should be sought. In fact, it is always advisable to consult with your tax advisor before making any significant changes. Capital gains deductions are an issue in more active markets and faster growing markets with great appreciation.

Every two years home owners can profit from the sale of their home and not have to worry about capital gains for up to $250,000 for single homeowners and up to $500,000 on profits from the sale of a home as a couple. The cost of home improvements can't be directly deducted from taxes but the value added can be written off at the time of sale. Costs associated with improving and maintaining a home office or health related improvements may also be deducted as well as indirect costs of maintaining them.

Real estate property taxes are deductible. State and local property taxes can be deducted for the year they are paid. Your mortgage interest statement should list the taxes and homeowners' insurance placed in escrow. If you can't find this information you can contact your local city and court offices. In most cases homeowners can deduct the mortgage interest paid in the tax year from their income.

Buying a home has not become a guarantee for a better life, but for tax purposes, home ownership gives the owner more options and benefits than renting. There is no “golden rule “that will determine deductions. Any tax professional will tell you there are many variables that will influence the amount of interest you pay. A good tax professional or loan officer will be able to give you a good idea of what tax benefits to take advantage of to make your choice of homeownership the clear advantage that it should be. No matter what type of scenario you face, homeownership is more affordable than ever and over the long run the investment can prove much more rewarding.

Some additional tax resources:

http://www.irs.gov/individuals/index.html

http://www.bankrate.com/brm/itax/news/20030207a1.asp

http://www.kiplinger.com/personalfinance/features/archives/2005/01/taxguide2.html

With the changing of the seasons, it's possible to create a completely new look and feel with little or no effort for your home improvement. Fall has a way of creeping up on you before you realize it the warm days of summer are giving way to slightly cooler days and nights. The longs light days of summer are starting to lessen; the dark evening are creeping up earlier and earlier, so now's a perfect time to start your home improvement.

Once these changes start happening you begin to start spending more time indoors. Turning your home into a cozy retreat with just a few simple changes is possible with little or no effort by doing the smallest of home improvements and using a few decorating tips.

There are many small projects you can do to improve the look and feel of your home, just doing one or two of these tips it can make all the difference, so do a few of them or all of them if your budget allows. A good place to start your home improvement is with your front entry, after all this is what will greet your family and friends when they come to visit. So why not make a first impression there, set the mood before they even step foot into your home. In addition, it's a wonderful way to welcome you home at the end of a long workday, plus adding value to your home.

At the curb a charming antique patina mail box to start your way. If your front door looking tired old and faded a coat of paint can do wonders, new entry door hardware can be just the key, a lovely rust patina door latch will add a lot of old world charm. Add a stunning matching outdoor lantern; many of today's home hardware and lamps and lighting companies have matching or complimentary finishes available that will allow you to tie everything all together. For a final cozy touch, on the corner of the porch, add a charming display. Start with a few pumpkins and gourds, add a corn stock or two tie them all together with bunch of Indian corn for even more color tuck in a few of your favorite potted harvest flowers.

The Kitchen is usually the heart of the home, so this fall why not make a few changes to add value and change to the look of your kitchen to create a welcoming cozy feel with your home improvement. With two screws and a screwdriver you can change out your tired old knobs and pulls on your kitchen cupboards and draws with new warm and charming copper or bronze door hardware and achieve a whole new look. Two screws a couple of wires will allow you to try a new lighting chandelier with warmth and color to enhance your total area. At the sink and the stove or back door you can through in a couple new rug with warm harvest colors, to finish it off create a lovely center piece with some warm fall leaves, a few gourds and some holiday fruit, apples, pears, and mini pumpkins makes a charming centerpiece for your table. Lastly, a few berry rings hinging from your new cupboard knobs home hardware can be just the touch.

In the bathroom, retire your tired old cold chrome fixtures, in their place; spice it up, with some new ones with a lovely warm oiled rubbed bronze finish, that's what makes a warm and cozy feel in your home improvement. Hang towels of bunt orange, greens and gold, use a small basket with rolled hand towels, for the counter or at the tub. Try new bronze home accessories include a soap dish, toothbrush holders; these bath accessories can make such a difference. As a final addition to your home improvement, add some soaps with seasonal fragrance, maybe a candle or two with matching bronze holders.

Article Source : IRS Tax Deduction

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Alex Peterson has sinced written about articles on various topics from Real Estate, Writing and Tax Deductions. . Alex Peterson's top article generates over 8100 views. to your Favourites.

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