Looking forward to tax season?

looking forward to tax season?Wanting a home of your own is the dream of almost every grown up. A place to feel secure and safe, a place to raise your family. But do the tax benefits help reduce your tax liability? Here are some guidelines to help you make that decision.

  • If you are a taxpayer and have owned your home for at least two out of five years, you are permitted to exclude a maximum of $250,000 of your gain as a single taxpayer and up to $500,000 of your gain as a married taxpayer filing jointly.
  • If your gain on your principal home exceeds the allowed exclusion, the resulting gain is taxed at the lower long-term capital gains rate rather than the marginal tax rate of the homeowner.
  • For acquisition debt, homeowners can deduct the interest paid on up to $1,000,000 used to buy, build or improve their first or second home.  You may also deduct the interest on up to $100,000 over the acquisition debt if it is recorded as a lien on your first or second home.
  • The IRS will allow you as a taxpayer to choose between filing an itemized return or take the offered standard deduction.
  • Paid points on a new home loan are considered interest paid and you can deduct them in the year you paid them. On the other hand, if you paid points for refinancing a home, these must be amortized over the life of the mortgage.

As always, for more detailed information, talk to your tax professional.

Interested in starting off 2015 with a new home ? I can send you a list of Fairfax homes for sale based on your preferences and we can get you into a nice one.

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