The government encourages home ownership by providing tax advantages. These tax rules can reduce the cost of buying a home and the cost of owning it. They may also leave you with more money when you decide to sell.
Condoideas can help you understand the tax benefits of home ownership – perhaps your biggest financial investment.
At the same time, we encourage you to consult your accountant or financial advisor to put house ownership in the context of your unique tax situation.
Mortgage Interest
No matter what kind of home you own, the interest you pay on your mortgage burden is tax-deductible. The limit on this incentive is $1 million. If this will be your second home, you will need to spend 14 days a year there, or 10% as much time as it is rented.
If you have taken a home equity loan or secured other debt with your home, you can deduct the interest on that, too, up to a limit of $100,000. Just beware if a lender extends a loan to you that is based on an amount greater than the market value of your house; in that case, the amount you can deduct may be limited.
If you pay for points to reduce the interest rate of your mortgage or another loan linked to your home, you can also deduct that amount. Be aware that the points on a mortgage to buy or build your principal home can be deducted fully in the first year. However, points must be deducted over the life of a new loan that is part of a refinancing plan, a home equity loan, or a loan secured by a second home.
Tax-free Profits on Sale
Some of the profit that you make on the sale of the home you own is tax free – up to $250,000 in profit for individuals and $500,000 for couples who file jointly.
Do pay attention to certain stipulations.
The home must be your principal residence.
You need to have lived there for at least two of the previous five years.
You can claim the exemption only once every two years. Still, if extenuating circumstances – like health issues or new employment – apply, you may still be able to claim a partial exemption.
Property Taxes
Property taxes that you pay on your home may be claimed as an income tax deduction. and not only on your principal home but any you own. Escrow funds held to pay future taxes are not deductible.
Moving Expenses
Finally, moving costs may be deducted if your new home is at least 50 miles closer to your job than your old one. Note that you must continue to work full-time in the general area of your job for 39 weeks during the following year. Those who are self-employed and work in their homes may deduct moving expenses if they move 50 miles or more and they work full-time near the new location for 78 weeks during the following 24 months.
Miami Real Estate Learning Center
Tax benefit of condo ownership
Related Articles
Related Articles
Miami welcomes tax refugees
Everyone has been talking about the Tax Cut and Jobs acted signed by Trump at the end of 2017. A growing list of wealthy buyers are now moving and investing in South Florida because of this new law, looking for a tax break. Florida now seems to be the perfect refuge from high tax areas as New York or California. As a result, the real estate market in Miami has been nothing else than benefited, with an increase in condo prices and a rising job creation.
Related Articles
THE MARKET IS STILL THRIVING IN MIAMI BEACH
Condoideas Realty Group Newsletter May 2024
The calmer season has arrived but great weather and temperatures are still welcoming you to Miami. So this is a good time to assess how was the high season in Miami. Did we do better or worse than last winter? Miami-Dade single-family home sales rose 1.5% year-over-year in 1Q 2024, from 2,413 to 2,449 sales. However the condo market saw its sales volume decrease by 12% in the first quarter of 2024 because we need more inventory not because there are no buyers. The very good news is that the luxury market (over $1M) did rise 4% in March 2024. Now that we feel better on the real estate outlook in Miami let's have a look at some nationwide real estate trends.