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By Rob Kelly | Agent in 80027
  • Louisville, Colorado-Tax Tips

    Posted Under: How To... in Louisville  |  January 14, 2009 5:06 AM  |  892 views  |  No comments
    Tips for the Home you live in Tips for the Home you rent out
    Buy a home and get $7500 tax credit
    This credit is an opportunity of a lifetime for anybody who has not owned a home for last 3 years. The maximum credit amount is $7500. The tax credit works like an interest free loan to be repaid over 15 years. Take advantage of this tax credit as it ends on June 30, 2009.
    Buy a vacation home
    Owning a vacation home has more benefits than you may think. You can deduct some of the costs associated with owning a vacation home, such as real estate taxes, personal property taxes, mortgage interest, and points.
    Increase Standard Deduction by deducting property taxes
    If you do not itemize you can increase your standard deduction by the amount of real property tax. Singles can deduct $500 and married filing joint can deduct up to $1000.
    Increase tax deduction with depreciation
    Depreciation is a decrease in value of property for tax deduction. Land is not depreciated and building is depreciated over 27.5 years life for residential rental and 39 years for commercial. You can increase this tax deduction by taking advantage of accelerated depreciation. Identify short life assets (5 or 15 years) in your investment property and use accelerated deduction for these assets
    No tax on Foreclosures and Canceled Debt
    Any homeowner who loses their home to foreclosure will not have to pay income tax on forgiven or canceled debt. You can exclude up to $2 million of forgiven debt ($1 million if married filing separately) on your primary home. The home must have been used by the owner as a primary home.
    Pay lower tax on buy/selling of properties
    Anybody who buys and sells multiple properties is designated as a dealer by IRS. All profits from income as a dealer is considered ordinary income. Investors who buy and sell multiple properties do it in the name of corporation or LLC to avoid dealer designation.
    Tax Free Profit from sale of Home
    Taxpayers who sell their primary home at a gain can make up to $250,000 in profit if they are single owner, and $500,000 if they are married filing jointly. If you are retiring and the price of your home has gone up, take advantage of this best tax break for homeowners.
    Pay 15% tax on property sale
    Any gain on a property held for less than a year and sold is considered short-term gain and taxed as ordinary income. If you hold the property for more than a year then the gain is a long term gain. The long term gain tax rate is at 15%.
    Did you move – write off moving expense
    Homeowners who have recently found a new job may be able to write off the cost of moving themselves, their household goods, their vehicles, and other reasonable costs associated with the move. There are some restrictions: for instance, the new job must be 50 or more miles farther from the old home than the old job was.
    Pay no taxes on property sale
    You can defer your tax on gain on a sale of an investment property by doing a 1031 exchange. In order to completely defer the taxes with your 1031, the replacement property must be of equal or greater value, and all the equity from the sold investment property must be reinvested in the new investment.
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