Are you planning to by a house this year or do you already own one? Whatever be the case, there are so many tax advantages for you to enjoy. While your chosen accountant St. Cloud FL will guide you more about these, here is a quick review of major tax incentives for homeowners.
Without a mortgage, it is too difficult to buy a home so you must have already gotten approval for this, and now will be paying back the loan to the backs. How much of your monthly payments comprise of interest? Significant amount is it not, especially when you sum it all up. No problem, the IRS is really lenient in this regard and allows you to deduct the entire interest amount. However, your total loan amount should not exceed a million dollars for you to take this interest.
And by the way, if you have another mortgage, you can avail that as a deduction as well as long as you spend at least 14 days of the year in that house.
You might have paid some mortgage points so to get a better rate on your mortgage. Great, these points also provide you with another benefit. Utilize them as your deductions now and bring down your taxable amount. But there is a slight issue. You have to claim these points in the year you buy the house. This will allow you to deduct all the points at once. If you claim them in the next year, you cannot deduct the points at once. Instead, you will have to deduct them every year for the entire mortgage term. Obviously, the former option has a more pronounced effect on your taxes, and so that is what you should avail.
As for your your second mortgage, there is no choice in his regard. You will have to deduct some of these points through the loan tem.
Okay, it has been some years since you have been living in this house. Maybe it is now time to get it renovated. Why not conduct a renovation project and install a few home improvements? Not only will your home value increase, but you can deduct these expenses as deductions.
Please not that not all home improvement expenses can be deducted. Ask your accountant St. Cloud FL for more information.
Planning to sell your house? Even then there is a tax advantage as long as you sell it for an amount that is less than $500,000. You do not have to pay a single penny of tax on this if you are married. For single individuals, the tax-free amount is half of this.
And by the way, you can use this deduction whenever you sell your house a s long as it is after every two years.
So when you now fill out your tax forms, make sure you have availed all the above deductions and tax credits. If you have any issues down the road, contact your chosen accountant St. Cloud FL and they will offer you valuable suggestions.
Home Buying: What’s Deductible and What’s Not
Planning to buy a home? This is one of the biggest purchases you will make in your life in terms of your finances. The industry experts have high hopes for the housing market this year, and you must get your finances in order if you want an edge. There will already be many buyers, and you need to be a step ahead of them. Do you have a pre-approval for your mortgage? Get one now. after this, you can start searching for homes.
Obviously, there are tax implications of buying a home. What are these? Do you get an edge or is it otherwise? Your chosen accountant St. Cloud FL will provide you with the details. Over here, we have quickly briefed some of the main points. Before we proceed, please note that all these apply only to residential properties and not to rental units, investment houses or vacation homes.
Yes, many expenses related to homeownership are tax deductible, but down payment is not one of these. In case, you are using your retirement savings for your down payment, you should let the investor know about it. This will help you in avoiding the early penalty for withdrawal, provided you meet a few requirements. These include buying the home for the first time and using the funds for acquisition. This penalty occurs if you withdraw any amounts before you turn 59.5 years of age.
By the way, even if you avoid the penalty, you will have to pay taxes on the distribution.
Closing costs are not completely deductible, but some of the amounts are. For instance, the loan origination fees and property taxes. For the rest, you will have to pay some taxes. Consult with your accountant in St. Cloud, FL.
Mortgage interest is a tax deductible amount. Basically, your monthly payment comprises of a principal amount and the interest amount. Please note that it is just the interest amount which you can deduct, and not the principal payment. This deduction is valid only if your loan amount is less than a million dollars.
You can also deduct the interest on your second mortgage, provided you stay in the property for at least 14 days.
Repairs and Remodeling
Repairs and remodeling costs are mostly not tax deductible. But if you are making any energy efficient improvements, you can deduct that from the tax gains.
The accountant in St. Cloud, FL suggest that you should maintain a record of all repair and remodeling expenses that are major. These include new heaters, roof replacements, kitchen remodels and so on. If you plan to sell the home later on, you can reduce this amount from the taxable gain.
Mortgage points are deductible. If you claim this for the tax year in which you buy the home, you can deduct all of them at once. Otherwise, you will have to deduct a fraction of them for the rest of the loan term.
Home Insurance Policy
Home insurance policy protects you which is why you must have it. However, it does not bring you nay tax advantages.
If you need more information about our St. Cloud, FL accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, Hunters Creek, Lake Nona, Celebration, Winter Park, Windermere, Dr. Phillips, Maitland, Altamonte Springs, Winter Garden, Ocoee, Apopka, Belle Isle, Edgewood, and Oakland FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin number, incorporations, and non profit 501c3 tax exempt.