Posted by at 7:41 AM on Monday, March 17, 2008
The government does reward taxpayers when they borrow money to buy a house. Make sure to check all the tax breaks you may be entitled to if you own a house while having your taxes prepared.
Points:
Discount points are paid to secure a lower interest rate. You cannot deduct the full amount of points in the year paid because they are prepaid interest. You can deduct them over the life or term of the mortgage. There are conditions which make discount points tax deductible in the year they are paid.
Penalties from pre-payment:
You may decide to pull out of their mortgages sooner than expected. Pre-payment penalties are tax deductible.
Real estate pro-rated taxes:
When the seller sends the tax collector the check, most likely the buyer paid a pro-rated portion of taxes for the year at closing. Make sure to deduct the right amount.
Mortgage pro-rated interest:
Depending on what time of the month the closing date occurs, the buyers pay a small or large amount of pro-rated mortgage interest for that month, and this can be written off. The final closing/settlement statement will show exactly how much.
Loan interest for home construction:
If the constructionperiod does not last over two years and it is your primary residence, you can write off interest for the construction loan.
Condos For Sale Daytona Beach Florida make great investments as vacation rentals with 1031 tax breaks and can be places to spend your vacation.
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