homeowners

MID Limited per Residence

A recent U.S. Tax Court ruling clarified the IRS position that the $1.1 million limit for mortgage interest deduction applies per residence and not per taxpayer as some high-priced homeowners were hoping.

A married homeowner filing jointly can have fullly deductible interest on a mortgage of up to $1,000,000 of acquisition debt and up to an additional $100,000 of home equity debt. If the married couple files separately, each party is limited to deducting the interest on half of those maximum amounts.

The court case came about when two unmarried individuals who owned a home together as joint tenants felt that they were entitled to deduct the interest on $1.1 million of debt each. IRS did not agree with their understanding and neither did the Tax Court. The Court ruled that the limits apply per residence, not per taxpayer even if a home is co-owned by unmarried taxpayers.

The result for the taxpayers in this case was that their deduction was cut in half resulting in much more income tax due. While this situation only affects a few taxpayers, homeowners in this position should have a discussion with their tax professional.

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homeowners

Choose Your Deduction – Just In Time For TAX TIME!

One third of all U.S. households, 75% of households with more than $75,000 income and most homeowners itemize their deduction on their federal income tax returns. It makes sense because the interest paid on their mortgage and their property taxes probably exceeds the allowable standard deduction.

However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.

Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers.

Sincerely,

RE/MAX Results

John Mazzara

7300 France Ave S #410

Edina, MN 55435

Off-952-929-2577

Cell-612-386-7027

Fax-952-928-3799

Google Voice- 952-491-0884

john@johnmazzara.com

http://www.MinneapolisStPaulHomes.com

Watch my Youtube video on how I sell a home:

http://www.youtube.com/watch?v=oz1zGDOXcoQ

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NMLS # 332556

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homeowners

Keep Track of Improvements

People are staying longer in their homes according to the National Association of Realtors and the U.S. Census. Over time, even a modest appreciation could result in a significant gain and homeowners should have a strategy to minimize possible taxes.

Maintenance on a principal residence is not deductible but improvements can add to the basis which can reduce the gain in the sale. Improvements are easily identified if they add to the value of a home, prolong its useful life or adapt it to new uses.

Receipts and other proof, such as pictures, should be kept during ownership and for several years after the sale of the home. They can include the closing statements from the purchase and sale of the home and all receipts for improvements, additions or other items that affect the home’s adjusted basis or cost.
For a principal residence, basis includes the price paid, plus certain acquisition costs and capital improvements made. When the property is sold for more than the basis, there is a gain. Currently, homeowners that meet the requirements can exclude up to $250,000 of gain if single or up to $500,000 if married filing jointly.

A simple strategy is to put documents that affect the basis of the home in one envelope. Any receipt for money spent on the home that isn’t the house payment or utilities, goes into the envelope. Your tax advisor will be able to sort through them to determine the capital improvements.

For more information on determining basis or capital improvements, see IRS publication 523, Selling Your Home.

homeowners

Home Selling Process – How to Get Started?

By Ramir Sarmiento

Home selling is one area, which involves some processes. Though there are a lot of tips and guides on home selling found anywhere, some homeowners still have a hard time doing it. This is because they do not know how to get started. If you have decided to sell your own home, below are some basic steps that you should follow in order for you to come up with a great deal with your buyer.

The first step in home selling is to do some planning. Prepare your house well to give a good impression to interested buyers that it has been well maintained and everything is in good condition. If you have prepared your house, you need to prepare also yourself. If the reason for selling your house is because you want to buy a new one, make sure first that you are qualified to buy before selling your old house.

If you think your house is ready to be owned by another, try to look for a realtor. He will be the one who will help and guide you in the whole process of selling your home. Ask someone who is experienced enough in this field. Know what kind of marketing strategy he can offer and how much commission he will charge you. You should be in good tandem with your realtor.

Make a listing agreement between you and the agent. The agreement should contain the scope of work and how much involvement each of you will take part in the whole process. It also includes the amount of money you are going to spend.

In setting the selling price of your home, make sure that you include the amount indicated in the listing agreement. Be realistic and reasonable in setting the price. Overpricing your property may not attract potential buyers while setting the price very low will be a loss on your side. Make some cost analysis and find out the value of your property. Remember to include all the expenses, which you have incurred throughout the selling process.

Once buyers get interested with your property, they will surely require home showings. You and your house should be ready for this. If you hired an agent, leave your house and let him do the sales talking to the buyers. If you do the home selling yourself, be prepared with the things that you are going to say and the parts of the house that you are going to showcase.

Finally, if the buyer is interested to purchase your home, he will make an offer. You may either accept or reject the offer but make sure that you know how to negotiate. A lawyer should write the negotiations in standard forms. It should be well understood by both parties the things that are included and excluded in the sale.

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