Buying a home is the single most valuable investment many families make, and home ownership offers tax breaks that make it the foundation for your overall tax planning. The gulf coast of Florida's real estate market (specifically Sarasota's, Bradenton's, North Port's, & Venice's markets) was hit hard with some strong correction after the bubble. As a CPA Firm in Sarasota, Florida, we have been helping our clients deal with the effects, but also have seen improvements as home values have increased.
If you are undecided as to a purchase or sale, it is important to know that the tax law provides numerous incentives to home ownership, including the following:
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Buying, rather than renting, replaces nondeductible rent with deductible mortgage interest.
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Taxpayers can deduct an unlimited amount of property tax they pay on any number of residences.
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Homeowners can exclude up to $250,000 of gain ($500,000 for married couples filing jointly and certain surviving spouses) from taxable income when they sell.
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There is no penalty for an early withdrawal from an IRA for a “first-time” homebuyer for up to $10,000 so long as the proceeds are used for acquisition of a home.
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Self-employed individuals may deduct expenses for a portion of the home used for business. A simplified optional method for claiming a home office deduction is available beginning in 2013.
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Energy credits are available for environmentally friendly and ecologically responsible home-related expenditures.
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A temporary provision that excludes the discharge of “qualified principal residence indebtedness” from gross income has been extended through December 31, 2013.
You may benefit from a close review of these provisions, particularly if you are considering transactions involving your home, including selling, refinancing, or renting. Many home ownership tax benefits also apply to a second home. We would like to assist you with home ownership as it applies to your overall tax plan.
George V. Famiglio, Jr, CPA/PFS, CFP, CFS, CGMA. Est. 1971
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