Mission Viejo Homeowners (and Their Hefty Tax Advantages)

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 Mission Viejo 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

homeownership 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 Mission Viejo 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 Mission Viejo taxpayers, the tax

ramifications can be persuasive—and another good reason to give me a call to explore today’s

market!