Homes - A Great Tax Deduction!

Daily Real Estate News March 28, 2008 Last-Minute Home Owner Tax Primer

Here's some great information home owners need to know about concerning the deductibility of mortgage interest and property taxes.Taxpayers may deduct on Schedule A of Form 1040 mortgage interest on the purchase or home equity debt on two residences, their primary home and another dwelling, including a boat or a mobile home. These dwellings must have sleeping, cooking, and toilet facilities to qualify for a loan interest deduction. Interest paid on vacant land isn’t deductible.

Real estate taxes are deductible on all properties owned by the taxpayer — not just the first two. The deduction must be taken in the year the taxes are paid. Taxes placed in escrow are deductible when they are paid to the taxing authority, not when the money is put in escrow. Penalties and interest on late tax payments aren’t deductible. Also, in order to deduct taxes and interest, the taxpayer must itemize instead of taking the standard deduction.

Source: Houston Chronicle, Shannon Buggs (03/27/08). This article is from REALTOR® Magazine Online Edition which can be found @ www.realtor.org/



Tax Benefits of Home Ownership

The tax deductions you can take for mortgage interest and property taxes greatly increase the financial benefits of home ownership. Here’s how it works.

Assume:

$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)

$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value
______

$12,577 = Total deduction

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

(12,577 X .28 = $3,521.56)

Note that mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.


This article is from REALTOR® Magazine Online which can be found at www.realtor.org



Daily Real Estate News March 27, 2008
Don't Forget: PMI is Deductible

As April 15 tax day approaches, here is a reminder for home buyers with mortgage insurance. Home owners with adjusted gross incomes of $100,000 or less can deduct the full cost of their government or private mortgage insurance premiums on their 2007 federal returns.Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction.This is a new tax break that Congress has approved through 2010. "On average, this year's tax break could be worth $350 per taxpayer — an annual deduction that qualified home owners can take each year through 2010," says Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA).

Source: MICA (03/26/08). This article is from REALTOR® Magazine Online which can be found @ www.realtor.org