Southwest Florida Real Estate from Sandra Rubinstein
Ethical Professionalism, Attention to Detail, & Follow Through
I thought you would be interested in the following article from The Wall Street Journal.
New Tax Laws Have Home Buyers Checking Out New Places
Looking for lower property taxes? Try Florida. The new cap on deductions for taxes, including on property, have people looking for deals outside high-tax states; Florida and Nevada more popular after the GOP overhaul.
https://tinyurl.com/yckxjetl
Would you want the bad news first or the good news???
On cannot take an IRS loss deduction on the sale of your Primary Residence; as it was not owned for “investment” purposes. BUT there is a bright side, if you qualify:
In the ownership of a Primary Residence, you may exclude from profit up to $250,000.0k-if single or $500,000.0k-if married on the sale of a Primary Residence that you occupied for 2 out of 5 years.
As always, protect yourself; seek the advise of a Tax Professional.
Vacation Home Tax Deductions are somewhat complicated and involved. The best plan is to stay current on your documentation & record keeping as to how and when you use the vacation home.
1. If you do not rent out the vacation home for more than 14 days throughout the year, you may deduct the mortgage interest & the real estate taxes on the Schedule A of IRS Form 1040.
2. If you use the vacation home for less than 15 days of the year and you rent the property for more than 14 days of the year (10% of the total amount of the rental period-whichever is greater); the property is treat as a “Rental Property”. Your expenses associated with your Rental Property are deducted on
Schedule E.
3. If you rent your home for part of the year and you use the home yourself for more than 14 days or 10% of the amount of the days you have rented it you will need to keep documentation and allocate the percentage of how often the home was rented vs. your personal usage. Items to keep track of-income & expenses
If you invested in upgrading your home with energy efficient appliances or products you may qualify for the “Residential Energy Tax Credit”. These tax credits are especially attractive as they allow you to itemize & deduct dollar to dollar, up to 10% of the amount you spent, on certain approved energy-efficient upgrades. This deduction does carry with it a lifetime cap of $500.00 (possibly less on some). So, please pay close attention if you have claimed any qualifying energy-efficiency deductions in years past on your return.
Here is a partial list of upgrades that may qualify.
1. Heating, Ventilation, and Air Conditioners
2. Insulation
3. Roofs
4. Water Heaters
5. Windows, Doors & Skylights
6. Stoves that use Bio-Mass fuel
***Please note: If a product has earned the Energy Star designation that does NOT automatically qualify it for the deduction. Not all ENERGY STAR certified products qualify for a tax credit.
Please check with a Licensed Professional or source for a complete list.
Home Mortgage Interest & Points (Prepaid Interest Deductions are reported on Schedule A of IRS Form 1040. Your Lender will send you Form # 1098 that will list the points you paid on the close of your loan or refinance. This amount also appears on the HUD-1 Settlement Sheet you received on the close or your loan or refinance.
1. Prepaid interest (points) are generally 100% deductible in the year that they were paid along with the interest you are charged throughout the year.
2. If you are opting to refinance (interest rates are at a all time low) & use the escrow in your home towards home improvements-any points paid are deductible in that same year.
a. If you are refinancing to get a better rate or a shorter term of the loan, or to use the monies for something other than home improvements (such as College Tuition) the points paid will be prorated over the life of the loan
