Tag Archives: Home Buying Guide

Tax Deductions For Homeowners

When you own your home, you are going to be eligible for some tax deductions. Many of the deductions available will relate to the mortgage you have, but others relate to the use of the property and the reason for buying. It is important that you know what tax deductions you can get so that you can take advantage of them.

Mortgage Interest Deductions

When you take a mortgage to buy a home, you can deduct all of the interest payments. There are some restrictions to these deductions with the first being that the mortgage cannot exceed $1 million. You will also only be able to deduct the interest on the mortgage if you are married and have filed jointly. If you are married, but filing your tax separately then the amount will be limited to $500,000.

The mortgage will also need to be secured by a first or second home. Additionally, if you have paid in full for the property, then you will not be able to take out an equity loan later using the house as collateral and deducting interest from that loan. There are some additional regulations to these deductions that you will be able to find out about on the IRS website.

Interest On Home Improvement Loan

If you have taken out a loan to complete home improvements, then you will be able to deduct the interest from your taxes. It is important that the loan you take out is being used for improvements only and not for repairs to the house as loans for repairs cannot have their interest deducted. To qualify for this deduction the loan needs to be taken out to add capital improvements to the property, adapt it for new users or extend the life of the property.

Property Taxes

Property taxes that you pay can be fully deducted from your income tax when using Form 1040. However, if you have decided to hold your money in escrow to pay the property taxes, then you will not be able to claim the deduction until the money has been taken out of escrow. Additionally, if you have received a partial refund of the property taxes, then the amount that you can deduct will be reduced.

Home Office Deductions

If you are using your home as a home office, then there are certain deductions that you can make. In order to qualify for this deduction part of your home will need to be exclusively and regularly used as your place of business or part of your home needs to be regularly used for storing items that are used in your business such as stock. If your home is being used in this way, you will be able to deduct costs such as insurance, repairs, and depreciation from your taxes.

The Moving Costs

Deducting moving costs are only possible if you have had to move for a job and you meet certain requirements. The new job needs to be at least 50 miles from your previous residence and where your last job was. You will also need to be working full-time for at least 39 weeks of the year before your move. You will also not be able to deduct all of the moving costs, but costs you can deduct will include lodging, transportation, and storage.

There are some tax deductions that you can make as a homeowner, and it is important that you take advantage of this. Most of the deductions will relate to the interest of loans made to purchase or improve your home.

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The Pros And Cons Of Condos Townhomes And Single-Family Residences

Individuals that decide to invest in real estate are making a wise decision. There are always ways to find excellent deals on real estate that is currently available. You can speak with a local realtor to find out what is currently being offered, and if you have the credit or cash, you can start buying real estate right away. However, you need to consider the type of real estate that you invest in before you make this type of investment. There are three types of real estate that you should consider right now. That includes condos, townhomes, and single-family homes that are for sale. Here is a brief overview of why you should purchase any of these, and some drawbacks that might be associated with each one.

Pros And Cons Of Condos

Condominiums have always been very popular for an assortment of reasons. Some of the positive aspects include low maintenance, upscale communities, and prices that tend to be affordable. The main drawback is that condominiums place you in proximity to all of your neighbors, similar to an apartment. These are much larger places to live, but you are limited regarding your living space, a problem for those that would like to have a backyard.

Pros And Cons Of Townhomes

These are very similar to a condominium in that you are in proximity to other people, typically separated by a single wall. However, unlike condominiums, these can be multi-story homes. These are perfect for people that would prefer having a lot more space, and also the ability to live in a low maintenance community. You will likely pay for this privilege, and if you do need quite a bit of space for you and your family, these are very good investment.

Pros And Cons Of Single-Family Homes

For those that would prefer to have a home on a lot, one that is not directly connected to anyone, a single-family home is probably your best investment option. Whether you are purchasing one to live in, or if you are going to be investing in properties that you can rent out, you really can’t go wrong with low prices on single-family homes. The one drawback associated with this type of investment is that it can be very expensive. It just depends on the size of the home and the lot that it is on. Other factors will include location, the age of the home, and the overall square footage. These are designed for people that would like to purchase an investment property that they can rent out to families, or something that they can hold onto for decades which can appreciate in value very quickly.

Which One Is The Best Option?

The best option depends on your situation. For example, if you are looking for investment properties, any of them can be a good choice. If you have comps on houses, condos, and townhouses in the area, if you can find one that is a great deal, it’s something that you should purchase. If you are looking for low maintenance investment, condominiums and townhouses are the best. It’s also possible that you could get into this type of investment for a much lower price point than an actual home.

All of these options are excellent for people that are looking at investment properties. The only drawbacks tend to be based upon location, the square footage, and the cost of upkeep. You may want to consider investing in all three types of real estate just to see which one works out the best. There are always going to be people that would like to rent a place to live. For a long-term investment, all of them will appreciate in value, especially in areas where homes are quite expensive. These pros and cons of investing in condos, townhomes and single-family homes should give you a better idea of where you should invest your money.

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