Property Tax Deduction
IRS publications provide tax information for everyone, including first-time home buyers. Take note that real estate property tax paid for your vacation home and first home are fully deductible from your taxes payable for income tax purposes.
Capital Gains Exclusion
Provided that you have resided in your home for 2 of the past 5 years, you can leave out up to a certain rate of profit from the capital gains. You don’t have to move up or purchase a replacement home so as to obtain such capital gains exclusion. In addition, there’s no age limit, and the “over-55” ruling does not even apply. You can rule out the above threshold from your taxes every 24 months. This would also mean you could sell every 2 years and pocket the profits free from taxation. Of course, this would be subject to certain limitations.
Preferential Tax Treatment
If you received more profits compared to the allowed exclusions upon the sale of your property, this profit will be computed as a capital asset on condition that you owned the home for over a year. As always, capital assets receive privileged tax treatment.
Loan Reduction Builds Equity
Every month, a certain percentage of your monthly payments are applied to your loan principal balance, thereby reducing your obligation. The manner by which amortization works, it’s safe to say that a major portion of your principal in addition to interest payments increase slightly on a monthly basis. It’s lowest during the first payment and highest during the last payment.
Consumers carrying credit card balances won’t be able to deduct the interest paid. This would cost them as much as 18 percent to 22 percent. Equity loan interests are often much less and such amount is deductible. For numerous home owners, it would only make sense to pay off such kind of loan with home equity mortgages. Consumers can even borrow against their home’s equity for diverse reasons like starting a new business, medical, college or home improvement. But be aware of the fact that some state laws put a ceiling on home equity loan.
So, are you finally convinced that you ought to purchase a home the soonest possible time? Why don’t you find MLS listings? This way, it will be a lot easier for you to find the right home. Never think of this essential step as a burden. When the right time comes, you’ll surely appreciate the fact that you’ve opted to invest your money in a property rather than simply renting an apartment all your life.
It’s crucial that you safeguard your own future and if you have kids, think of their security too. Times have changed. Rental expense is continuously increasing and you’re not even receiving any benefit from the amount that you give to your landlord. On the other hand, if you have a home, you’re in fact building your equity, which you can use at a later time. You see, everything points to the truth that investing in a home is the most excellent and plausible choice.