Fall in LA is my most favorite time of year! I love being able to wear sweaters during the day, the cool crisp nights, and above everything else, all the wonderful holiday parties that typically include an open bar! Now I know we are not quite ready to pack in our Ed Hardy Summer T Collection (GASP - I am joking) for fitted D&G ribbed v neck sweaters just yet, but the fall will be upon us in full force soon enough. Now I know you are already planning on what to wear for Halloween (last year I was Michael Phelps in just a speedo and gold medals - not sure how I am going to top that one), but have you also been strategically planning your real estate purchase?
Between now and Christmas are some of the best months to get a deal on that new home you've been eyeing. More times than not, sellers are looking to unload their properties before the first of the year. There is something cathartic about ending one chapter and beginning a new one by years end. What makes this an extra special time to buy is the $8000 new home owner tax credit. This program expires December 1st, so if you are planning on buying you literaly need to close escrow by November 31st to take advantage of this tax break. Definitely speak with your accountant and loan specialist to learn how you can take full advantage of this program!
Here are some other deductions that you might be able to utilize when becoming a home owner (*please speak with an accountant to verify what you do or do not qualify for):
· Mortgage Interest Mortgage interest on a home is usually fully tax-deductible. You can deduct interest on multiple mortgages, as long as they do not exceed $1 million. The purpose of the mortgage must specifically be to buy, build or improve a home.
· Property Taxes State and local property taxes can be deducted as an expense against income. However the real estate taxes are only deductible in the year they are actually paid to the government.
· Loan Origination Fees If you refinanced last year, you may be able to write-off any points you paid to buy down the mortgage rate. To do this, you deduct the points proportionately over the life of the new loan. For example, if you took out a 30-year loan, you would deduct 1/30th of the points you paid each year. Remember, if you've refinanced before, and you have points from the previous refinance that you haven't finished deducting, you can write off the rest of those points in the year you refinance. If you bought your home last year, the points you paid at closing are deductible on your income tax statement for that year. If the seller paid some (or all) of your points for you, you may be able to deduct those seller-paid points too!
· Private Mortgage Insurance...extended through 2010. Late in 2007, Congress extended the tax deduction for homeowners paying private mortgage insurance through 2010. This one has some restrictions - you must have bought or refinanced the home after January 1, 2007 and have an adjusted gross income under $110,000.
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