CENTURY 21: The Gold Standard
Tax benefits to homeowners.
Homeowners benefit from several generous tax advantages. The most important benefit is the mortgage interest deduction. People may deduct interest paid on mortgage loans totaling up to $1 million used to buy, build or improve a principal residence plus a second home. The IRS calls such loans acquisition debt. Points paid by the buyer or seller on a new mortgage loan for the purchase or improvement of a principal residence are deductible for the year in which the home was purchased.
Any points paid on a refinance mortgage, a loan to purchase a second home or a mortgage on income property must be spread over the life of the loan.
Note that when obtaining a new mortgage, the borrower usually is asked to pay interest from the closing date until the first of the next month. Check whether that charge is included in the year-end report. Property taxes on all real estate, including those levied by state and local governments and school districts, are fully deductible against current income. A homeowner cannot deduct maintenance expenses, nor can he take depreciation deductions on his personal residence.
Some moving expenses are deductible for people who changed jobs and relocated as a result. The IRS requires that the new employment be located at least 50 miles away, among other considerations.
Return to Home Buying TipsReturn HOME
LOGO DISCLAIMER: ©2008 CENTURY 21 Real Estate LLC. CENTURY 21® is a registered trademark liscensed to CENTURY 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.