Monday, January 21, 2013

Tax Breaks for Home buyers and sellers......

Eight Great Tax Breaks You Don't Want to Miss!  If you bought or sold a home in 2012......

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1. Selling Price

Real estate broker’s commissions, title insurance,

legal fees, advertising costs, administrative costs and

inspection fees are selling costs and can reduce

taxable capital gain by the amount of the selling

costs. That could result in a big savings depending

on the final sale price.

2. Mortgage Interest

Within limits, mortgage interest is also taxdeductible.

A married couple filing jointly can

deduct interest payments on a maximum of $1

million in mortgage debt secured by a first or second

home. Buyers may also be able to deduct some of the

interest they paid on a home equity loan or similar

line of credit.

3. Origination Fees

Something many buyers often overlook is points.

Points or origination fees on a home loan paid during

purchase are generally tax-deductible in full for the

year in which they were paid. Refinanced mortgage

points are also deductible, but only over the life of

the loan, not all at once. Homeowners who refinance

can immediately write off the balance of the old

points and begin to amortize the new.

4. Private Mortgage Insurance

If your lender required private mortgage insurance,

the PMI premiums are tax-deductible for mortgages

taken out from 2007 through 2011.

5. Home Improvements

Improvements made to a property prior to the sale or

once one moves in might qualify for an interest

deduction on your home-improvement loan.

Qualifying capital improvements are those that

increase your home’s value, prolong its life, or adapt

it to new uses, such as adding a porch or installing

energy-efficient windows.

6. Real Estate Taxes

Many times during a sale, the seller will send the

local tax collector’s office a check for real estate

taxes prior to the closing. In many circumstances,

however, the buyer will pay a pro-rated portion of

the taxes for the year at closing. This tax deduction

also gets overlooked.

7. Home Office Expenses

For new buyers who work at home: If a room is used

exclusively for business purposes, they may be able

to deduct home costs related to that portion, such as a

percentage of your insurance and repair costs, and

depreciation.

8. Relocation Costs

In some instances, if you have moved because of a

new job, moving costs may be deducted. These can

include travel or transportation costs, expenses for

lodging, and fees for storing your household goods.

Take Advantage!

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Every year the tax laws change and certain tax deductions become available while others

phase out. If you have recently bought or sold a home, it’s a good idea to seek out a

professional tax consultant to do your taxes. Missing deductions that you can legally claim

can add up.

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