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Tax Deductions for First Time Homeowners

By: Chris Castillo

If you are looking to buy a house you may want to know what tax deductions you receive as a first time homeowner.

There are several standard deductions you receive as a homeowner. To deduct expenses of owning a home, you must file Form 1040 and itemize your deductions on Schedule A (Form 1040). If you itemize, you cannot take the standard deduction.

Now your first question may be what does the IRS define as a home? Your first home may be a house, condominium, cooperative apartment, mobile home, houseboat, or house trailer.

If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Your house payment may include several costs of owning a home. Generally, your real estate taxes and home mortgage interest are included in your house payment. The only costs you can deduct are real estate taxes actually paid to the taxing authority and interest that qualifies as home mortgage interest.

Real estate taxes are the annual tax on the value of real property. You can deduct the tax if it is based on the assessed value of the real property and the taxing authority charges a unique form rate on all property in its jurisdiction.

Home mortgage interest is the interest you pay on a loan secured by your main home or a second home. The loan can be a first or second mortgage, a home improvement loan, or a home equity loan.

Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040).

Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate.

*Note that if you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in your home.

Here are some expenses, which may be included in your house payment that cannot be deducted:
- Fire or homeowners insurance premiums.
- FHA or other mortgage insurance premiums.
- The amount applied to reduce the principal of the mortgage.

You cannot deduct any of the following items:
- Insurance, including fire and comprehensive coverage, and title and mortgage insurance.
- Wages you pay for domestic help.
- Depreciation.
- The cost of utilities, such as gas, electricity, or water.
- More settlement costs.
- Forfeited deposits, down payments, or earnest money.

Note that you can deduct some of these items if you operate a home business. For example, you are allowed to use depreciation on your personal residence if you have a home office.

Author Resource: Chris Castillo is committed to providing free real estate tax related information on the web. Get more information concerning real estate taxes at www.real-estate-owner.com

Article From RealEstateArticles4U.com

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4 Pieces Of Reverse Mortgage
Information About HECM Eligibility
And Repayment

By: Juhani Tontti

According to the reverse mortgage information, the loan sum is determined based on your age and the value of your home.

The HECM program sets limits to your loan costs and actually FHA controls, that the lenders will meet their obligations.

• Is HECM Reverse Mortgage Better Than Other Reverse Mortgages?

According to HECM reverse mortgage information, there are three benefits above others. HECM reverse mortgage has the largest loan advances, you can select the payment schedule and you can use the money for the purpose you want. So with one term, it is flexible.

Many seniors think, that the reverse mortgages are expensive ones. However, the HECM reverse mortgage loan is cheaper than the loans, which are privately insured. In most cases the HECM reverse mortgages have lower interest rates, so according to the total costs, they are obviously cheaper ones.

• The Reverse Mortgage Information About The Eligibility.

The HECM reverse mortgage loans are available in 50 states in USA, plus in the District of Columbia and Puerto Rico. The borrower is eligible, if he or any of the owners, who lives in a home is at least 62 and the home is used as a principal residence.

There are some restrictions concerning the home type, mobile homes for instance, and the home must meet HUD minimum property standards. If you must repair the home, you can do it with the money you will get from the HECM loan. And, this is important, you have to discuss with the official counselor.

• The HECM Reverse Mortgage Information About The Repayment.

Usually the HECM reverse mortgages will be paid back, when the last borrower dies, sells the home or moves out permanently. Also, if the last borrower, who lives in the home, will be away 12 months or over because of the physical or mental illness or if he fails to pay the property taxes or hazard insurance.

• What Is The Debt Limit?

In the case, that your HECM reverse mortgage loan sum has grown and is equal to the value of your home, this value limits the debt sum, if the home is sold to repay the loan. But usually the debt sum cannot exceed the value of your home.

If this happens in some exceptional cases, like during the economical recessions, the mortgage insurance will cover the difference between the home value and the loan sum.

The insurance is compulsory. The reverse mortgage loan sum cannot be debited from your other assets or from your heirs or relatives.

Author Resource: Juhani Tontti, B.Sc., Marketing. Senior, Do You Plan To Get Income From The Reverse Mortgages? If You Do, Research HECM Reverse Mortgage Loan. It Is Flexible! Visit: Reverse Mortgage Information

Article From: RealEstateArticles4U.com

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