Listed here, not necessarily in the order of highest priority, are the top 10 homeowner tax breaks for 2008:
1. Mortgage insurance: qualified borrowers can deduct the full amount of their private or government mortgage insurance if their mortgage was originated between
2. Forgiveness of debt tax:In many instances when a lender allows a homeowner to forgo repayment of principle, and/or interest the debt is considered ordinary taxable income. This law allows certain taxpayers to exclude discharged debt from taxes provided a lender discharges the debt in 2007 2008 or 2009.
3. Mortgage loan interest:This is usually the largest deduction, a homeowner has because most of the monthly payment is interest. Mortgage interest is deductible on a maximum of $1 million in mortgage debt secured by a first and second home. The $1 million level applies to married tax filers who filed jointly and single taxpayers.
4. Energy tax credits: As part of the energy policy act of 2005, tax credits of up to $500 are available for upgrading many energy components of the home.
5. Points: Points are often deductible over the life of the loan.
6. Property taxes: Property taxes on real estate are usually fully deductible.
7. Home improvement loan interest: Interest on home improvement loans is usually deductible.
8. Capital gains exclusion: An excellent tax shelter comes from provisions of the taxpayer relief act of 1997, which allows married taxpayers who filed jointly to keep, tax-free, up to $500,000 in profit on the sale of a home used as a principal residence.
9. Selling costs and capital improvement: When you sell your home you can reduce any taxable capital gains by the amount of your selling costs, which include real estate commissions, title insurance, legal fees, advertising and inspection fees.
10. Home-based business deduction:Home-based businesses owners who use some of their home exclusively for business can deduct the same percentage of home related costs as their business actually exclusively uses.
And as an added bonus...
11. Moving costs: Moving as a result of a new job may allow you to deduct some of the cost of moving.
Often the rules and regulations surrounding these deductions are complicated and confusing so I strongly recommend that you seek professional help to make sure you get the maximum benefit of all available tax breaks possible. Also keep in mind that some tax breaks take the form of a deduction, which reduces your taxable income and some as a tax credit which is a dollar for dollar reduction in the actual taxes that you owe, so again, consult your tax adviser for detailed information on these and other tax breaks that may be available to you.
by Brian Leavitt Northstone Real Estate, Inc.
Brian Leavitt is a Licensed Real Estate Broker and a Licensed Mortgage Broker representing Northstone Real Estate Inc and Northstone Mortgage.
Brian Serves clients within the Northwest Multiple Listing Service.
You can contact Brian directly by phone at 425-837-4700 or toll free at 800-806-3145 or by email at firstname.lastname@example.org
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Brian is licensed by the Washington State Department of Licensing and the Washington State Department of Financial Institutions License number 510-MB-19802 and is a memberr of the Seattle King County Association of Realtors and Northwest Multiple Listing Service.