Top Tax Breaks On Owning Property #6

June 9, 2007

There’s no place like home to find shelter.  Home ownership offers a score of tax deductions and credits designed to help offset the cost of housing and to keep the housing market fueled with new buyers.   Here’s a look at the Top Tax Breaks.

Home-based Business Deduction:  Home offices that use a portion of your home exclusively for business could qualify you deduct a percentage of costs related to that portion.  Included are a percentage of your insurance and repair costs, utility bills and depreciation.  Under clarified provisions of the Taxpayer Relief Act of 1997, if your home office qualifies you don’t have to allocate a home sale’s capital gains between the home and the business.

Previously if you used say, 10 percent of your home for a home-based business.  Ten percent of the gain from a sale would be subject to capital gain taxes and you couldn’t use the capital gains tax exclusion on that portion.  The clarified provision does not excuse you from a recapture tax if you’ve taken a depreciation deduction because of the home based business.

*Everyone’s tax situation is different, visit the Internal Revenue Service’s site for more details or contact your CPA or tax preparer to verify that this applies to you.

Posted in All Things San Diego, Helpful Hints, Lending, Real Estate, Taxes, Things of Interest