Your home may be brimming with tax breaks and now is the time to take advantage of the deductions you're entitled to in order to see a reduction on next year's taxes. The experts at Quicken Loans report that interest rates are still at historic lows and say now is the time to purchase or refinance a home. While you should always consult a tax professional, Quicken Loans offers this go-to list of the top 10 tax deductions for homeowners:
1. Mortgage Interest
Mortgage interest on a home is usually fully tax-deductible. Homeowners can deduct interest on multiple mortgages, as long as they do not exceed $1 million. The purpose of the mortgage must specifically be to buy, build or improve a home.
2. Points Paid on a Purchased / Refinanced Loan
If you refinance in 2008, homeowners may be able to write-off any points they paid to buy down the mortgage rate.
The points you paid at the closing on a home are deductible on your income tax statement for that year. If the seller paid some (or all) points for you, you may be able to deduct those seller-paid points as well.
3. PMI - Extended Through 2010
Late in 2007, Congress extended the tax deduction for homeowners paying private mortgage insurance through 2010. Homeowners must have purchased or refinanced the home after January 1, 2007 and have an adjusted gross income under $110,000.
4. Capital Gains with No Income Taxes
Thanks to the 1997 Tax Act, once every two years, single homeowners can realize a tax-exempt profit of up to $250,000 - as long as the seller owned and occupied the home as a principal residence during any two of the last five years. Married homeowners who file jointly on their tax returns do not have to pay taxes on up to $500,000 of gain when they sell their primary residence.
5. Home Improvements - They Can Help When You're Ready to Sell
Although expenses associated with home improvements cannot be deducted, keep in mind that making improvements to a home may increase the selling price of the home. Keep all receipts from home improvements, which may help prove the home's worth at resale and reduce the potential taxable gain when selling the home.
6. Real Estate and Property Taxes
State and local property taxes can be deducted as an expense against income. However the real estate taxes are only deductible in the year they are actually paid to the government.
7. Home Offices
Work from home? If there is a qualified office in the home, costs associated with maintaining it, such as painting and utilities, may be deductible.
8. Limited Moving Expenses
Homeowners who have recently relocated for work may be able to write off the cost of moving themselves, their household goods, their vehicles and other reasonable costs associated with the move. However, the new job must be 50 or more miles away from the previous residence.
9. Health-Related Improvements
Any home improvements for medical purposes can be deducted entirely from your taxes as long as the improvements do not add to the overall value of the home and have been made for a chronically ill or disabled person.
10. Vacation Homes
Owning a vacation home has more benefits than you may think. Some costs, such as real estate and personal property taxes and mortgage interest, can be deducted.
To take advantage of these and other tax deductions in 2008, the time to buy a home or refinance is now. Visit Quicken Loans to refinance with the name you trust. The experts at Quicken Loans are tops in customer service and convenience. With Quicken Loans you can refinance your loan online without leaving your home--they come to you to sign the closing documents!
For more information or to learn more benefits of refinancing your home, visit Quicken Loans
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