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Tax Benefits of Owning 
Minneapolis Real Estate


Uncle Sam wants you to be a homeowner. 

If he didn’t, he wouldn’t give homeowners so many tax breaks. Of course, it’s up to homeowners to make certain they claim all the tax deductions to which they are entitled.

Here are 9 tips to save you money at tax time.

1.  Mortgage Interest.  
Joint tax filers can deduct all the interest on a maximum of $1 million in mortgage debt secured by a first and second home, or half of that amount single filers. However, you can't use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

2.  Points.  
Your lender may charge you a variety of fees, called points. One point equals 1 percent of the loan principal.
Refinanced mortgage points are also
deductible, provided they are amortized over the life of the loan.

3.  Equity Loan Interest.  
You may be able to deduct some of the interest you pay on a home equity loan. However, the IRS places a limit on the amount of debt you can treat as home equity debt for this deduction. Your total home equity debt is limited to the smaller of $100,000 (or $50,000 if filing separately), or the total of your home's market value minus certain other outstanding debt against it.

4.  Home Improvement Loan Interest.  
If you take out a loan to make substantial home improvements, you can deduct the interest on this loan. The work must be a capital improvement, increasing your home's value, prolong its life or adapt it to new use, like adding a fence, driveway, swimming pool, porch, deck and so on.  

5.  Property Taxes.  
Property taxes are fully deductible from your income - but you can't deduct escrow money held for property taxes until the money is actually used to pay your property taxes.

6.  Home-office Deduction.  
If you use a portion of your home exclusively for business purposes, you may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, and depreciation.

7.  Selling Costs and Capital Improvements.  
If you decide to sell your home, you'll be able to reduce your taxable capital gain by the amount of your selling costs. Real estate commissions, title insurance, legal fees, and inspection costs are all considered selling costs. In addition, the IRS recognizes that costs of decorating and repairs are also selling costs if you complete them within 90 days of your sale and with the intention of making your home more saleable.

8.  Capital Gains Exclusion.  
Thanks to the Taxpayer Relief Act of 1997, many home sellers no longer suffer a taxable gain. Married taxpayers filing jointly now get to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. Single filers can keep up to $250,000 tax-free.

9.  Moving Costs.  
If you move because you got a new job, you may be able to deduct some of the moving costs.  

I look forward to hearing from you!

 

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