Owning Houston Real Estate a Bonus at Tax Time
Posted by 2M Realty on Monday, February 8th, 2010 at 4:56pm.share the Houston Real Estate Blog!
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It is the time of year when owning Houston real estate is almost guaranteed to generate a year-end bonus: tax season. Though April 15 is likely beyond the short-term focus of most Americans, various tax materials have undoubtedly started to find their way into mailboxes.
The W-2 earnings statement has likely arrived by now, followed by a 1099 from the bank. Don’t forget, though, to save that statement from the mortgage company as interest paid on Houston real estate can be used as a valuable tax deduction.
These days it isn’t difficult to find financial experts who advocate renting a home as opposed to purchasing one. As most of the nation continues to battle through the real estate crisis, it is rather easy to forget some of the benefits associated with owning property. But sometimes owning isn’t such a bad thing.
According to the IRS web site (www.irs.gov), one may deduct interest paid on a qualified residence that “you pay on a loan secured by your main home or a second home.” You can also deduct points paid on a mortgage if certain criteria are met.
The value of these tax deductions, however, has drawn criticism of late. According to a recent Yahoo article, real estate tax breaks aren’t worth the underlying risk of a property purchase – especially in light of this national downturn.
Author Troy Adkins suggested that real estate tax deductions are of “nominal value, because the amount of interest expenses that most people incur are of somewhat similar amounts to the standard deduction. … Therefore, unless you take out a large loan, and have a really high interest rate on your loan, the tax deduction benefit will be of marginal value,” (“When Owning Your Home Doesn’t Pay”).
For those who do own Houston real estate – or more specifically, property in areas such as the Alvin real estate or Katy real estate markets – the interest tax deduction can be used to offset home-related expenses or applied to an old-fashioned splurge.
And if you happen to be a first-time buyer of Houston real estate, or a repeat homebuyer who lived at your prior residence for at least five years, additional tax credits are within reach. The federal government recently extended a program through April 30 that offers an $8,000 credit to first-time buyers and a $6,500 credit to repeat buyers.
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2M Realty is a unique brokerage firm providing agents both traditional and Internet services throughout the Greater Houston real estate market. With its' Treehouse virtual platform, participating agents experience the freedom of working from home and get to retain 100% of the commission. This platform is an end-to-end online solution giving agents personalized websites, lead management programs, marketing collateral tools, form libraries, transaction management, electronic signature functionality and more.
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