5 Homeowner Tax Myths
With tax season fast approaching the deadline of April 15th, all are on the move to get there taxes done. This week we are going to talk about issues regarding tax advantages and tips for homeowners. Today's article covers 5 myths that most homeowners have regarding tax advantages.
1. My mortgage interest will reduce my tax bill
This is true for most, but if you don't itemize this is false. The standard deduction in 2006 for single taxpayers will be $5,150, $7,550 for head of households, and $10,300 for married couple filling jointly.
2. All costs related to my home are deductible
The simple answer is no, you can't use homeownership related cost as deductions. Some believe that PMI payments, association fees, property insurance cost, and repair cost are all deductible. All 4 of these are not deductible. However it is important to keep track of these expenses because if you decide to rent out or sell your house, these expenses will affect the properties tax basis.
3. I must use money from my home sale to buy another residence
The tax laws changed in 1997 to were if you sell your house anywhere between 2 to 7 years after your purchase, you can take up to $250,000 in profit untaxable. If you file married you can differ $500,000. The only clause to this is you have to purchase a similar property and can't change property uses like selling a house and purchasing raw land.
4. Putting my child on my homes title is a smart tax move.
This is a myth that is very complex. To avoid confusion over estate taxes and residential taxes, I advise to consult an attorney. The misconception of being able to just transfer your house into your child's name before death and allowing them to avoid taxes is false.
5. If I take a capital loss when I sell my home, I can write it off.
Real Estate unlike other assets that depreciate during down turns, doesn't give an invester the ability to write the losses off. This is a misnomer that was probably started by wishful homeowners.
Feel free to contact us anytime with questions regarding Real Estate transactions you are facing.
Nolting Real Estate
140 Enchanted Pkwy. Suite 203
Manchester, Mo 63021
(636) 391-9997 and/or
noltingrealestate.com
1. My mortgage interest will reduce my tax bill
This is true for most, but if you don't itemize this is false. The standard deduction in 2006 for single taxpayers will be $5,150, $7,550 for head of households, and $10,300 for married couple filling jointly.
2. All costs related to my home are deductible
The simple answer is no, you can't use homeownership related cost as deductions. Some believe that PMI payments, association fees, property insurance cost, and repair cost are all deductible. All 4 of these are not deductible. However it is important to keep track of these expenses because if you decide to rent out or sell your house, these expenses will affect the properties tax basis.
3. I must use money from my home sale to buy another residence
The tax laws changed in 1997 to were if you sell your house anywhere between 2 to 7 years after your purchase, you can take up to $250,000 in profit untaxable. If you file married you can differ $500,000. The only clause to this is you have to purchase a similar property and can't change property uses like selling a house and purchasing raw land.
4. Putting my child on my homes title is a smart tax move.
This is a myth that is very complex. To avoid confusion over estate taxes and residential taxes, I advise to consult an attorney. The misconception of being able to just transfer your house into your child's name before death and allowing them to avoid taxes is false.
5. If I take a capital loss when I sell my home, I can write it off.
Real Estate unlike other assets that depreciate during down turns, doesn't give an invester the ability to write the losses off. This is a misnomer that was probably started by wishful homeowners.
Feel free to contact us anytime with questions regarding Real Estate transactions you are facing.
Nolting Real Estate
140 Enchanted Pkwy. Suite 203
Manchester, Mo 63021
(636) 391-9997 and/or
noltingrealestate.com
posted by Russell T. Nolting at
2:00 PM
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