As this season’s controversies swirl through Washington, one of them seems likely to wind up being at the top of the heap: federal income taxes. Whether or not they will be simplified (hopefully) or lowered (ummm—probably?) will be sorted out in due time, but one detail is a lead pipe cinch: when the dust clears, the real estate tax advantage will remain.
If any politician is thinking about eliminating the real estate tax advantage, he or she is wisely being very quiet about it. For good reason: that’s an idea that would probably lead to a quick retirement from public life courtesy of many displeased voters. Certainly, that’s likely to be the case as far as Bowling Green homeowners and home buyers are concerned.
I don’t provide financial or tax advice, but some of the long-standing real estate tax advantages are well-known and detailed on Uncle Sam’s public sites. The headline tax benefits of home ownership explains their widespread support—among them:
- The mortgage interest deduction (up to $1 million) on first mortgages is one that speaks for itself—and speaks loudly. Per software provider CCH, depending on their adjusted gross incomes, in 2013 average taxpayers wrote off anywhere from $7,780 to $17,060.
- Over and above the first mortgage interest payments, an additional deduction for interest on home equity loans of up to $100,000 can apply.
- Additionally, real estate taxes can be deducted in the year they are paid—as can mortgage origination fees.
- When qualifying Bowling Green residences are sold, profits of up to $250, 000 (twice that for married joint filers) may be excluded from the seller’s federal capital gains tax.
- For investment properties operated as rentals, there are other qualified expenses that can be tax deductible: your tax advisor will detail the rules.
Finance blogger Bob Christman’s recent “Real Estate Markets on the Mend article centered on the real estate tax advantage being key to why “more Americans may be in a position to buy or sell properties in 2017.” He listed more reasons, but for Bowling Green taxpayers, the tax ramifications can be persuasive—and another good reason to give me a call to explore today’s market!