Your Home?The Best Tax Shelter!
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Finance > Taxes
Mar 1, 2007
Christine P Silva
Your Home?The Best Tax Shelter!
OK, here is-- the Ultimate Tax Shelter-- Your HOUSE! For those of you who are unfamiliar, a ?tax shelter? is usually an investment that gives you a great tax benefit and allows you to reduce your taxable income. Home owners can deduct their mortgage interest, points, loan pre-payment penalties, real-estate taxes and even late fees!
For single people, especially those without children, a house may be the best investment that you can make. Honestly, you have to live SOMEWHERE, right? Why pay a landlord? Pay yourself, and buy a house! The tax benefits are almost immediate, and, even in the worst possible scenario, where your house loses value, you still get a good tax write-off, and you won?t be paying rent!
If there is any possible way you can purchase a home, even a small home, or a condo, it will almost certainly save you money on your yearly tax bill.
TOP 5 REASONS TO BUY A HOME
Here are the TOP FIVE reasons for buying your own home:
1. Why Rent?-- Even if your rent is cheap, with the yearly tax savings, your home mortgage may be cheaper, especially in the long run. And, with a fixed rate mortgage, your payment will never go up, unlike rent. Remember, when you rent, you are paying for someone else to buy THEIR house.
2. Great Tax Deduction-- Okay, most people already know that you can write off your home interest. You cannot write off your rent.
3. Safety and Security--These are troubled times-- many people, even those with good incomes, are underinsured. If you have a major health problem, or other serious financial difficulty, you can file for Bankruptcy protection, and the government cannot take your primary residence. This is a real concern for many families, especially those with sick children, or dependent parents. With a rental, you can be evicted at any time, for any reason, as long as the landlord follows the law.
4. Make Money! One of the great benefits to owning a home is EQUITY! Equity is the amount that your investment appreciates over time. In California, for instance, many homes have appreciated 200% or more in just a few years. Many people use this equity to purchase another home, or to ?cash out? and purchase rental property, etc. How else can you make 250,000-500,00 dollars tax free?
5. TAX-FREE Income! Yes, everyone, you can get tax-free money, (up to 500,000) when you sell your home. And, amazingly, the rules are pretty liberal. Usually, the home has to be your primary residence for at least 2 years. However, there are MANY exceptions-- if you have to sell your house because of your job, (transfer, for example), the profit from the sale is still tax-free (up to a certain percentage). There are many other reasons why your profit from the sales of your house can still be tax free, even if you didn?t live in it for 2 years. Here are some examples:
1. Multiple Births, same pregnancy (twins, triplets etc)
2. Severe Illness
3. Death of a joint owner
4. Divorce
5. Job-Related move
6. Other ?Unforeseen Circumstances?
So, get out there and go house shopping! It?s fun and it could save you thousands of dollars at tax time!
For single people, especially those without children, a house may be the best investment that you can make. Honestly, you have to live SOMEWHERE, right? Why pay a landlord? Pay yourself, and buy a house! The tax benefits are almost immediate, and, even in the worst possible scenario, where your house loses value, you still get a good tax write-off, and you won?t be paying rent!
If there is any possible way you can purchase a home, even a small home, or a condo, it will almost certainly save you money on your yearly tax bill.
TOP 5 REASONS TO BUY A HOME
Here are the TOP FIVE reasons for buying your own home:
1. Why Rent?-- Even if your rent is cheap, with the yearly tax savings, your home mortgage may be cheaper, especially in the long run. And, with a fixed rate mortgage, your payment will never go up, unlike rent. Remember, when you rent, you are paying for someone else to buy THEIR house.
2. Great Tax Deduction-- Okay, most people already know that you can write off your home interest. You cannot write off your rent.
3. Safety and Security--These are troubled times-- many people, even those with good incomes, are underinsured. If you have a major health problem, or other serious financial difficulty, you can file for Bankruptcy protection, and the government cannot take your primary residence. This is a real concern for many families, especially those with sick children, or dependent parents. With a rental, you can be evicted at any time, for any reason, as long as the landlord follows the law.
4. Make Money! One of the great benefits to owning a home is EQUITY! Equity is the amount that your investment appreciates over time. In California, for instance, many homes have appreciated 200% or more in just a few years. Many people use this equity to purchase another home, or to ?cash out? and purchase rental property, etc. How else can you make 250,000-500,00 dollars tax free?
5. TAX-FREE Income! Yes, everyone, you can get tax-free money, (up to 500,000) when you sell your home. And, amazingly, the rules are pretty liberal. Usually, the home has to be your primary residence for at least 2 years. However, there are MANY exceptions-- if you have to sell your house because of your job, (transfer, for example), the profit from the sale is still tax-free (up to a certain percentage). There are many other reasons why your profit from the sales of your house can still be tax free, even if you didn?t live in it for 2 years. Here are some examples:
1. Multiple Births, same pregnancy (twins, triplets etc)
2. Severe Illness
3. Death of a joint owner
4. Divorce
5. Job-Related move
6. Other ?Unforeseen Circumstances?
So, get out there and go house shopping! It?s fun and it could save you thousands of dollars at tax time!
Article Source: http://www.articlerich.com
Christine P Silva, BA, CRTP, lives in California with her husband, two children, and three spoiled cats. She earned her undergraduate degree from San Jose State University, and her advanced accounting certificate and tax license from Cosumnes River College. writes primarily non-fiction material, and enjoys writing about financial wellness, income tax matters, health, and senior issues. Please visit her website at www.vrpp.org/
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