“How can you best minimize your tax obligation under the new laws if you plan to purchase a home?”. This was one of the questions addressed in a recent article from House Logic, a National Association of Realtors publication. It offered some very helpful information regarding tax-savvy home-buying, which is worth sharing because most people are concerned with the new tax laws and how they affect real estate investments.
The new limit on allowable tax-deductible mortgage and property tax for a primary residence is $750,000. Yearly, you can only write off the interest you pay up to this cap if you have taken out your loan after December 17, 2017. If you have an older loan and you itemize, you can keep deducting your mortgage interest debt up to $1 million.
For those living in California, since finding a lower priced home is not always doable or desirable, another option suggested is to make a larger down payment, this way your mortgage doesn’t exceed the $750,000 cap.
Other one-time home purchase costs that are still tax deductible are closing costs, including real estate taxes charged to you when you close, mortgage interest paid when you settle, and some loan origination fees (points) applicable to a mortgage of $750,000 or less. It should be noted that you will only want to itemize them if all your deductions total more than the standard deduction.
As always, any questions regarding your taxes should be answered by a professional tax preparer or your CPA. This article is intended to enlighten you on just a few points included in the new tax law, which might significantly affect your real estate investments.
If you’re looking to refinance or invest in additional properties, give Sun Pacific Mortgage a call at 707-523-2099. We are here to support borrowers unable to qualify for a conventional loan. As a hard money lender, we have helped thousands with less- than- perfect credit and those needing fast, cash-like loans. If you have enough funding for a down payment and can prove you are capable of repaying the loan, you are a good candidate for our lending programs.
Read the full article here.
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