Don’t Miss These Homeowner Tax Benefits

Don’t Miss These Homeowner Tax Benefits

Written by Blanche Evans on 16 July 2015

One of the most useful yet widely misunderstood benefits of homeownership is tax deductions. Tax deductions are a welcome gift from the government, but if you’re renting, they benefit your landlord, not you.

Property tax deduction: Any money you paid during the year you purchase and in the years afterward to local state, county and city property tax assessors is tax deductible.

Mortgage interest deduction: Your mortgage interest on both first and second liens is tax deductible. Any points you paid to obtain a lower interest rate are deductible. Private mortgage insurance payments are also deductible.

Closing costs: Some fees to the mortgage lender are deductible. Ask your tax professional for guidance. You can deduct some moving expenses, such as items for home offices. Save your Hud-1 form and show it to your tax professional.

Home office deductions: If your home is your principle place of business, and you meet other IRS guidelines for home businesses, you can take a deduction on workspace dedicated to your business and no other purpose. You can also depreciate that portion of your home over 39 years. All improvements to the workspace are tax deductible. In addition, your security expenses, phones, internet costs, computers, insurance, and utilities can be deducted or depreciated according to IRS allowances. Percentages and limits apply, so talk to your tax professional.

Energy Star: If you purchased an energy efficient system or appliance for your home and it meets government Energy Star standards, you may deduct a portion of your expenses. Save your receipts.

Property sales deductions: If you purchased a home today, occupied it as a primary residence, and sold it in two years, you could be eligible for some capital gains exclusions up to $250,000 if you’re single, or $500,000 if you’re married. You can even live in the home two years, rent it out for three years, and still enjoy the capital gains exclusion.

There may be many other deductions out there for you to take advantage of that are associated with your home, so save all receipts throughout the year for repairs, parts, purchases, remodeling, etc. Some allowances and special circumstances apply, so before taking this exclusion, be sure to talk to your tax professional.

Save your tax records up to seven years, because you have to be able to support the deductions you take with documentation such as receipts, credit card statements, cancelled checks, and online banking. Make sure you take deductions and depreciation only for legitimate items.

Remember all the benefits you could be getting in deductions, your landlord is currently enjoying while billing all costs associated with managing the home to you. Wouldn’t you rather do that yourself?

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There’s more to a Staten Island home purchase offer than the stated price.

While the stated purchase price of a home in Staten Island, NY is the starting point in an offer to purchase, other details of the offer determine the true costs to the buyer and the true proceeds to the seller. These details, along with the price, become points of negotiation.

The most obvious, common, and costly detail is the request for the seller to pay the buyer’s closing costs. Depending upon the loan program, this could equal as much as 9% of the purchase price. On a home valued at $300,000, paying buyer’s closing costs would mean a $27,000 reduction in proceeds for the seller – and a $27,000 savings for the buyer. Then there are the inspections and the repair allowances. Buyers usually pay for the inspections, but they can ask the seller to pay these costs. Every purchase offer should include a set figure that the seller agrees to spend on repairs, if required. This figure must be deducted when the seller is looking at net proceeds. And then, if more expensive repairs are needed buyers and sellers must either return to negotiations or let the transaction die. But those aren’t the only factors that can affect the buyers’ or the sellers’ finances. Timing can also play a role. If the buyer is leaving another home or the seller is buying a new home, the closing/possession date can save or cost them dollars. Think of the cost of putting your household furnishings into storage and renting temporary shelter in the interim between closing on one home and moving into another. Next, look at what’s included in the purchase price. Kitchen and/or laundry appliances may already be included per the listing. If not, the buyers can ask for them. Inclusion saves the buyers money, while it may cost the sellers to replace them in their new home. So even though these items are not given monetary value on the purchase offer, they do have value that both parties need to consider. The same is true for items like a riding lawn mower. The seller may not need one in their next home, but leaving it behind does add value for the buyer. Whether you’re buying or selling a home here in city, before you focus on the stated purchase price, look at the true price. You’ll see it after you make the additions and subtractions. If you have questions about these costs and how they affect your bottom line, call me at 917-202-8309 or drop me a note at John@JohnMartelotti.com. I’ll be happy to speak with you. And when you’re ready to buy or sell a home, it would be my pleasure to guide you through a smooth transaction.

John E Martelotti                ><((((*>Licensed Real Estate Salesperson
Robert DeFalco Realty                                   (o) 718-987-7900 x 220 ~ (c) 917-202-8309 ~ (e) John@JohnMartelotti.com

 

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