Tax Breaks for Homeowners
Homeowners can acquire several tax breaks but most are clueless about such benefits. Two important tax breaks Ã¢â‚¬Ëœhomeowners can use are on mortgage interest and selling your home.
Claiming Mortgage Interest
Claiming mortgage interest is one of the most common deductions among taxpayers and has been evolving for the last 10 years. Recently, a cap of $1.1 million mortgage debt has made it possible for more deductions on first mortgages and even second homes. The deduction also covers multiple loans, therefore, individuals with a summer home in California and a primary home in Utah can claim interest on both, as long as the total is under $1.1 million.
However, it is important to note that claiming a mortgage deduction on home equity loans that will not be used to improve the property. For example, if you refinanced your loan but donÃ¢â‚¬â„¢t use the money to build a pool, that money will not be fully deductible.
Selling Your Home and Tax Breaks
If you decide to take advantage of the resurging housing market and sell your home, tax benefits are also available. If you sold your home in the past year, advertising, real estate broker fees, insurance, and certain repairs to reduce your capital gains on the sale can all be claimed on your return.
When you find a new home take note of the distance it is from your old home. If it is located more than 50 miles away from your old home, you may be able to deduct your moving expenses.
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