Tax tips for Home Buyers & Sellers

May 18, 2017

1.  Sale of Principle Residence Exclusion - $250,000 of gain for single filers and $500,000 of gain for joint filers can be excluded from income on the sale of a principal residence.  Must have owned and lived in the home as a principal residence for 2 of the last 5 years.
Exclusions can only be used every two years.
2.  Mortgage loan interest paid is deductible (reflected on 1098 from lender).
3.  Real estate taxes paid are deductible.  If real estate taxes are paid from escrow, they should be reported on Form 1098.
4. When purchasing a home, points or loan acquisition fees are deductible in year paid.
5.  Points paid when refinancing are deductible over the life of the loan.
6.  When refinancing, any remaining loan acquisition fees not yet deducted from a prior refinance are deductible
7.  Moving costs may be deductible if you changed job location and residence location.
8.  Pro-rated mortgage interest paid at closing reflected on the settlement sheet is deductible.  Check to see if this interest has been reflected on the 1098 received from the lender.
9.  Pro-rated real estate tax paid at closing reflected on the settlement sheet is deductible
10.  Track home improvement costs to include in the cost basis of the home when sold.
11.  Prepaid mortgage interest and property taxes are deductible.
12.  Interest is usually deductible on home equity loans and lines of credit.

   

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