Home, the mother of all tax shelters
As homeowners know, owning a house allows for many different types of deductions. Uncle Sam has also allowed real estate investors deductions that no other investment vehicle ex. (stocks, bonds, mutual funds, etc...) is allowed. Taxes are what keeps the middle class and upper middle class from being independently wealthy and smart investors look to real estate as a way to pay lower taxes. Here are some deductions and ideas for those smart investors that are looking to get ahead.
1. Taxes -
The government allows all real property taxes including local and state taxes as deductions. If your taxes are escrowed into your mortgage you get the deduction when you bank pays the taxes. The government doesn't have restrictions on the number of properties that you deduct taxes on.
2. Interest -
Uncle Sam allows for any interest paid on your home loan to be deducted. This is also allowed on any second or vacation home. The personal-interest deduction is limited to the first $1 million of debt. One item that is very important is that also as much as $100,000 worth of home-equity is allowed also.
3. Gain Exclusion -
As we have talked in the last 2 blogs, the government allows for up to $250,000 in gains for single owners and $500,000 for married couples when going to sell your primary residence. This exclusion is only allowed if the owner has lived in the property for 2 of the last 5 years. One thing that most people don't know is that the owner can get a partial exclusion if :
1. You have a change in place of employment
2. You have health reasons
3. There are unforeseen circumstances
Allow of these circumstances allows for partial exclusion if you have lived in the residence less than 2 years and have documents proving these circumstances.
4. Home Offices -
This is were the government has given the homeowner the upper hand. The government allows for a part of a homeowners square footage up to 25% of the total square footage be classified as a home office, while allowing you to deduct depreciation and expenses for working in this part of the home. This deduction is smart for anyone that has a home office and uses it.
Let us show you more ways that owning your own home saves you money on your taxes.
Nolting Real Estate
140 Enchanted Pkwy. Suite 203
Manchester, Mo 63021
(636) 391-9997 and/or
NoltingRealEstate.com
1. Taxes -
The government allows all real property taxes including local and state taxes as deductions. If your taxes are escrowed into your mortgage you get the deduction when you bank pays the taxes. The government doesn't have restrictions on the number of properties that you deduct taxes on.
2. Interest -
Uncle Sam allows for any interest paid on your home loan to be deducted. This is also allowed on any second or vacation home. The personal-interest deduction is limited to the first $1 million of debt. One item that is very important is that also as much as $100,000 worth of home-equity is allowed also.
3. Gain Exclusion -
As we have talked in the last 2 blogs, the government allows for up to $250,000 in gains for single owners and $500,000 for married couples when going to sell your primary residence. This exclusion is only allowed if the owner has lived in the property for 2 of the last 5 years. One thing that most people don't know is that the owner can get a partial exclusion if :
1. You have a change in place of employment
2. You have health reasons
3. There are unforeseen circumstances
Allow of these circumstances allows for partial exclusion if you have lived in the residence less than 2 years and have documents proving these circumstances.
4. Home Offices -
This is were the government has given the homeowner the upper hand. The government allows for a part of a homeowners square footage up to 25% of the total square footage be classified as a home office, while allowing you to deduct depreciation and expenses for working in this part of the home. This deduction is smart for anyone that has a home office and uses it.
Let us show you more ways that owning your own home saves you money on your taxes.
Nolting Real Estate
140 Enchanted Pkwy. Suite 203
Manchester, Mo 63021
(636) 391-9997 and/or
NoltingRealEstate.com
posted by Russell T. Nolting at
3:19 PM
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