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Property Deduction
Property deduction benefits make homeownership an even better investment due to tax advantages. As a homeowner, you can deduct the portion of the mortgage payments that go towards interest and any property taxes. However, these property deduction are valuable only if, combined with other deductible expenses, they are large enough to justify itemizing. (In other words, they exceed the standard deduction.)
Profits, or “capital gains,” from selling a home are not taxable unless they exceed $250,000 for a single taxpayer or $500,000 for married taxpayers. This exemption can be used repeatedly, as long as each home is held for at least two years.
A capital gain is realized anytime the selling price, less sales expenses, is greater than the adjusted tax basis of the property. Tax basis is the original cost of the home plus the cost of additions and improvements less any gains from previous sales that were deferred (prior to 1997, homeowners could defer capital gains by buying a home at least as costly as the one sold). There is no age limit on the capital gains exemption.
Real Estate investors and landlords have even more options of property deduction. For more details on residential rental property ownership tax benefit, check rental property tax deductions.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Property Deduction is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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