Here are a few tax savings you might be able to use. (I advise that taxpayers always should seek advice on such matters from a tax professional as taxation laws do change.)
Benefits for taxpayers include:
• Most homeowners can deduct property taxes and interest paid on their mortgage every year of ownership.
• Homeowners can borrow against the equity they build. Equity from a home can be used to improve the property, buy a car or pay for an education, and homeowners may have the ability to deduct the interest from their federal taxes. Renters never have this opportunity.
• Single taxpayers owe no tax on the first $250,000 of profit from the sale of a principal residence. The amount is $500,000 of profit for married couples filing jointly.
• Interest paid on a second mortgage may also be deductible if the total of the first and second mortgages is no greater than $1 million.
• Certain moving expenses may be deductible if the move is job-related and the relocation is 50 or more miles from the previous residence.
• Real estate tax exemptions apply for people who meet specific criteria such as being a veteran, blindness or homestead exemption. Homeowners should check with local tax consultants to see if any exemptions apply to them.
• Is there a best time of year to buy a home? If a home is purchased within the first six months of a year, there are more months of deductible mortgage interest. Though, in the long run, owning a home will still save money on income taxes regardless of when it is purchased.
Anne-Marie McKenzie, a Realtor with Coldwell Banker Residential Brokerage, works exclusively with buyers, sellers and investors, and teaches free buyer classes. For information on the next class or for more on her services call 847-1725 or send email to AnneMarie.McKenzie@NewEnglandMoves.com.