Phil's Personal Finance Tip of the Day:
Tax Write Offs Every Homeowner Should Know
Published November 07, 2012
FOXBusiness
Home isn’t only where the heart is, it’s also where tax deductions reside.
Home values may still be depressed, but homeowners can rely on some sizeable tax breaks. “It really pays from a tax perspective,” says Les Kramsky, executive vice president and general counsel to title insurance agency Silk Abstract Company. “You can really get great tax deductions.”
The amount of tax breaks depends on the size of your mortgage and your income bracket. In order for it to make financial sense to itemize home deductions, you must exceed the standard deduction, explains Bob Walters, chief economist at Quicken Loans. “If you have $110,000 loan and pay $4,000 in taxes and the standard deduction is $12,000 you’re not exceeding it. The bigger the loan the better.” For 2012, the standard deduction for married couples filing jointly is $11,900.
Exceeding the standard deduction when you own a home isn’t that hard to do. Here’s a look at some of the bigger deductions that can save you money come tax time.
When you take out a mortgage you agree to pay interest on the life of the loan. With the home mortgage interest deduction you are allowed to reduce your taxable income by the amount of interest paid on the loan each year.
“Mortgage interest is the biggest deduction for a homeowner,” says Kramsky. “It’s a big tax advantage for homeowners.” In order to get the deduction you have to elect to itemize deductions and they must exceed the standard deduction. For example, if you have a $500,000 home and are paying 4% interest, you’ll benefit by taking the mortgage interest deduction, adds Walters.
Read more: http://www.foxbusiness.com/personal-finance/2012/11/07/tax-write-offs-every-homeowner-should-know/#ixzz2BZ5R0P00
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