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Everybody loves a piece of land. That is the real limited resource we have on earth. And the government allows us some deductions on them too.
Real estate tax deduction is a policy whereby owning a piece of property like your house gives you many tax advantages. Some of these include:
1. Interest paid on mortgage: permissible unto a maximum if you have bought your first and second homes within $1.1 million.
2. Fee points: completely deductible points, these are arrived at when you have taken mortgages. One point converts to 1% of the original amount and this is literally thousands of dollars and completely deductible.
3. Equity loan interest: certain rules imposed by Internal Revenue department, but partially deductible as it are loan on your home credit.
4. Home improvement loan interest: interest on making improvement but remember, there is a slight difference between a repair and an improvement. You can flout the rules by knowing the difference.
5. Home office deduction: if your home doubles up as your office too, then this is the deduction to make.
6. Selling Costs: these are costs that you normally include like legal costs, transfer costs advertising and admin costs and so on.
7. Capital gains exclusion: is a house which you resided for two years in the past five years, you need not pay any capital gains tax. Married taxpayers can get a maximum limit of $500000 and 4250000 if filed individually.
8. Home moving costs: this is an option available to ones who are relocating. If you are moving to any other part of the stator country, claim it.
9. Property Tax: Finally, the real estate tax (property tax) that you pay to your local government is completely deductible from your federal income tax.
So you see, taxes are not really that harsh, if you plan and make the most of it. Just keep those years and eyes open and make a small payment to those smart tax consultants, they will ensure they will the rest.
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