Our Own Homes Are The Mother Of All Tax Shelters

Our Own Homes Are The Mother Of All Tax Shelters

Our Own Homes Are the​ Mother Of All Tax Shelters
When it​ comes to​ tax shelters,​ there’s no better or​ safer place than our own homes .​
There are a​ vast number of​ companies out there spending a​ lot of​ money on​ advertising trying to​ convince us that we should be sending our hard earned dollars to​ some island in​ the​ sun,​ where (for a​ nice fat fee of​ course) they will keep our money safe and out of​ the​ hands of​ the​ IRS .​
Most of​ these programs,​ for lack of​ a​ better word,​ are illegal or​ at​ the​ very best not as​ tax efficient as​ the​ claims they make.
Uncle Sam allows us to​ use our homes as​ a​ means of​ collecting a​ large number of​ tax deductions,​ credits and benefits .​
These were designed and assigned to​ law to​ help us offset the​ cost of​ owning our own homes .​
After all,​ homeowners are the​ cornerstone of​ any good economy .​
We buy consumable goods and services which creates jobs and supplies much needed dollars in​ both local and state taxes .​
These taxable deductions also keep the​ housing market fueled with new buyers which in​ turn helps keep the​ value of​ our homes going up .​
It really is​ only a​ matter of​ very simple math .​
As the​ demand for more and more homes increase,​ the​ supply gets smaller,​ (they don't make land anymore) - then the​ market price can only go one way,​ up .​
This creates real wealth for future generations of​ our families .​
For most of​ us,​ that is​ the​ Great American Dream - owning our own homes and creating real wealth for our retirement.
Our interest payments make up the​ largest portion of​ the​ mortgage payments in​ the​ early years of​ the​ loan .​
The interest we pay on​ our Home Loan,​ up to​ a​ maximum of​ $1 million in​ mortgage debt that's secured by a​ first and second home is​ tax deductible .​
These deductions will reduce our taxable income when calculated against our taxes due at​ the​ end of​ the​ year .​
The rules on​ these deductions are not too complicated once you​ know where to​ look .​
the​ $1 million level applies to​ joint tax filers .​
If you​ file single or​ separately you​ receive half the​ deductions allowed.
The interest we pay on​ a​ home improvement loan is​ also deductible against our end of​ year taxes,​ but calculated a​ little differently .​
We can deduct all the​ interest on​ a​ home improvement loan so long as​ the​ work is​ classed as​ capital improvement .​
Repairs,​ maintenance or​ cosmetic upgrades do not count and are not tax deductible .​
Capital improvements increase the​ home’s value .​
Adding a​ new room,​ a​ bathroom,​ anything that prolongs its life such as​ a​ new roof or​ adapting the​ home for new uses to​ assist older people or​ people with disabilities would be included for this purpose.
The Taxpayers Relief Act of​ 1997 which covers the​ exclusions on​ Capital Gains allows married couples who file jointly to​ keep up to​ $500,​000 tax free profits on​ the​ sale of​ a​ home used as​ a​ principal residence for at​ least two of​ the​ prior five years .​
This amount is​ halved for those who are filing single or​ separately .​
Our taxable capital gains are reduced by the​ amount of​ our selling costs .​
These include real estate commissions,​ title insurance,​ legal fees,​ advertising,​ and inspection fees .​
Capital Gains are calculated on​ the​ following basis: the​ original purchase price,​ plus the​ cost of​ capital improvements,​ minus any depreciation and the​ selling cost.
With more and more people creating Home Based Businesses there are tax deductions available .​
If you​ use a​ portion of​ your home exclusively for business you​ could qualify to​ deduct a​ percentage of​ costs related to​ that portion .​
You can Include a​ percentage of​ your insurance,​ repair costs,​ utility bills and depreciation.
It would appear that the​ Grass is​ not always greener somewhere else and sometimes the​ solution to​ our problem is​ right there,​ on​ our own doorstep.
Have an​ opinion or​ a​ question you​ would like me to​ answer,​ then write me! www.CarlHampton.com

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