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TAX ADVANTAGE
Primary Residence
Real estate offers many tax advantages. If you are selling your primary residence and lived there at least 2years out of 5 years, your capital gain may be excluded from tax upto $250,000 for single and $500,000 for married couple. Capital gain is your net profit after the sale of property. You can exclude selling expenses such as title insurance, advertising of your home, legal fees, etc. from profit gained from sale.
For primary residence, you can also deduct from your income, mortgage interest, any points you paid when acquiring financing, some of home equity loan upto $100,000, home improvement interest payments and property taxes. If you use part of your residence as a home office, you can deduct rent and depreciation of that office space. Tax deductions on maintenance and depreciation of your home is not applied for primary residence.
When purchasing a home, the first time home buyer can use $10,000 as a down payment for penalty free from IRS. First time home buyer is who has not purchased a property last two years.
Property with Investing Purpose
The home which is not a primary residential purpose yet investing purpose have to pay tax when there is a sale. You can save taxes on capital gain by applying 1031 exchange. You can own a real estate corporation to deduct all possible expenses on the property. The property for investing purpose can claim tax deductible on house depreciation, maintenance, advertising, utilities, insurance, property managing fees, repairs, improvements, etc. Of course, real estate taxes and mortgage interests are also tax deductible.
Want To Learn More About Tax on Real Estate?
Get Real Estate Tax Resources.
Read Books on Tax & Laws
Attend Real Estate Investing Seminar.
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