This is usually the time of year when Lewiston-Auburn area homeowners have gotten through tax season, heaved a sign of relief, and gone back to working on more important matters – like earning more money to make reducing taxes a goal worth pursuing. This year may be different in this last week of April. Why? Because this is an election year. Tax matters are already being widely debated, and changes that could affect everyone are more possible than usual. I’m bringing these topics up for discussion with the caveat that your personal financial and tax planning (including Lewiston-Auburn home buying decisions) should always be made after consultation with your trusted professionals. Currently, federal and State of Maine tax rules carry significant benefits that can greatly reduce a homeowner’s tax liability. They are unlikely to be eliminated, but you may want to keep your ear tuned whenever you hear these topics under discussion, because seemingly minor changes can have major impacts.
Mortgage Interest and Points
While renters found that they were able to use the standard deduction tables to simplify the filing of their federal return; homeowners, were usually better off using itemized deductions because of the welcome mortgage interest deduction as well as property taxes and other expenses they may have otherwise not been able to deduct. Points and closing costs paid to obtain a mortgage can also generally be deducted in the year they are paid.
Everyone with a standard Individual Retirement Account has heard about the penalties for withdrawing funds before retirement age. But currently there is an exception in some home buying situations. Generally, some IRA funds can be applied to home buying (or building) a first home without those tax penalties. The catch is that you can only withdraw up to $10,000 over your entire lifetime (not annually). Those with Roth IRAs may find additional tax advantages, too.
Real Estate Taxes
Qualifying local property taxes can amount to sizeable deductions. If, in the home buying process, you reimbursed a seller for prepaid property taxes, that amount can qualify, too. As in all financial planning, you should consult your accountant or other tax professional before making any important decisions. And whenever buying or selling a Lewiston-Auburn area property makes sense for your family, I’m standing by to answer all of your real estate questions.
Interest rates are super low, prices seem to have bottomed, the is an opportune time to buy your first home or move up. The Tanya Busch Team can assist you with purchasing, selling, as well as new construction. We work with one of the largest, quality builders in the State. Whether you are looking for affordable, elaborate or green-friendly construction, we can assist you. Give us a call for a low-key consultation! (207) 689-9880 or homes@TanyaB.com