New Tax Laws Shelter You and Your Money

 Homeownership has been given a big boost by Uncle Sam.  Sweeping tax law changes took place in 2001, which enhanced major changes of the 1997 Tax Relief Act affecting the tax treatment of home-sale capital gains.  Selling a home and moving to a new one is NOW more financially attractive than ever before.

• Most homeowners can now sell their home every two years and pocket up to $250,000 (for single tax filers) or $500,000 (married filing jointly) in profit with no capital gains tax.  The "once in a lifetime" 55 age limit has been eliminated, meaning you can use these exclusions every two years.  You must have used the property has your primary residence for two of the last five years to qualify .
• Homeowners can scale down their housing without penalty.  No longer do you have to buy a home of equal or greater value than your previous home.
• First-time buyers benefit from the changes in law as well.  The federal government now allows penalty-free early withdrawal from an Individual Retirement Account.  That IRA can be yours, your parents', your grandparents'.  However, income taxes on that money still apply.

Please seek professional tax advise for your unique situation.

Interest Payments.  Interest payments on a residential mortgages are fully deductible in most circumstances.  That's a key reason why homeownership is a superb tax shelter.  Mortgage interest on a second home is also deductible.  If you own a third home for personal purposes, the mortgage interest is treated as consumer loan interest and is not deductible.  Interest on home equity lons is deductible with some limitations.

Rental Losses.  If you have an adjusted gross income of $100,000 or less (not counting any loss from "passive activities," deductions for IRA contributions or taxable Social Security benefits), you can deduct up to $25,000 in losses from rental real estate against income from other sources.  This is an allowable deduction if you owned at least 10% of the property and actively participated in the management of the property.  If your adjusted gross income is between $100,000 and $150,000, you can still deduct some or all of your losses from rental real estate, depending on the amount of the loss.

Moving Expenses.  If you moved to a new home because of a new job or a job transfer, you may qualify for a moving expense deduction.  The distance between the old home and the new home must be at least 50 miles more than the distance between the old home and the old job.  The location of the new home is not considered.  Whethere a homeowner or renter, you can deduct the cost of moving household goods and the direct cost of moving you and your family.  You can also deduct expenses for lodging during the move but not the meals.

Local Taxes.  Real estate property taxes and state and local income and personal property taxes are fully deductible.

Points.  For home buyers, deductible expenses include settlement charges for points.  Deductible points are up-front charges for the use of money (not services).  One point equals 1% of the loan amount.  Points paid by either the buyer or seller are deductible by the buyer in the year of the purchase.

If you are buying a home and need financial assistance from the seller, consider having them pay for as many points as possible, thereby increasing your tax deduction.

Equity Loans.  Interest is fully deductible on home equity loans up to $100,000.  A home equity loan is a loan secured by a primary or second home.

Home Office.  If you keep records, schedule your appointments and carry on other such activities from your home office, some common home office expenses, such as utilities, insurance, repairs, cleaning and depreciation, may qualify for a deduction, even if you do the actual work in another location.

To get the complete Taxes and Real Estate package just fill out the form below.  Please complete form in full and indicate if you will be buying or selling.  Click the Submit button when you have completed the form.