By Patricia Kramer & Patricia Lou Martin
It’s official: tax season is upon us. In just a few days, homeowners and renters throughout San Diego will be filing their 2011 tax returns – and scrounging for every last tax break and benefit they can muster to minimize payments and maximize refund returns. In light of today’s attractive home prices and historically low interest rates, some new buyers are likely reveling in the chance to seize
this year. Real estate experts agree that home ownership offers great opportunities for additional savings and tax benefits – and that current market conditions combined with tax savings to make buying a home a smart and multifaceted investment.
There are multiple tax write-offs available to homeowners, ranging from property taxes and mortgage interest to sale profits, mortgage insurance premiums and of course the standard deduction to which all taxpayers are entitled. Here are a few of the more common homeowner deductions, as noted in a recent real estate industry press release via
- Mortgage Interest: Interest accrued from mortgages on first and second homes can frequently be written off; however, in order to qualify for the tax deduction, the interest amounts must not exceed $1,000,000 for acquisition indebtedness and $100,000 for home equity indebtedness. These limits also vary for individuals filing alone or married couples filing separately.
- Sale Profits: In addition to tax benefits based on the purchase of a new home, there are also deductions and write-offs available as a result of home sales. Provided that the home was occupied for two of the five years prior to its sale, the owner is entitled to tax-free long-term profit. Benefits vary for investors, however, for whom sales profits are taxed as long-term capital gains if the property in question has been owned for more than one year.
Depending on a homebuyer’s circumstances and the value of their property, these and other tax benefits can have a substantial impact on the overall investment constituted by a single real estate purchase. In all cases, it is advised that homeowners consult an accountant to discuss the best way to maximize savings during tax season; and that prospective buyers solicit the services of an experienced
San Diego real estate agent
who can guide them through the full-spectrum of value associated with the market and property types available.
To learn more about property value and real estate listings within the San Diego coastal markets, contact our experienced agents at