Most of the people are nowadays big or small real estate investors. If you own a home then you can be considered as a real estate investor and you need to learn various laws regarding real estate that could be of immense importance to you. Moreover, most of the laws that we should understand are very simple.
However, if you fail to understand these laws then you might suffer huge losses. Some of these basic principles are:
1) Real Estate Taxes Can Be Avoided While Selling Home- According to the law of real estate you would be exempted from profits if you are selling your home for not more than $250,000 if you file your request singly and $500,000 if you are filing it jointly. Such laws are made to safeguard the families and let them own their house or encourage investment in the real estate. What is more? If your profit is more than the specified amount then the tax is levied upon the price exceeding the limit but that home should be your primary residence to avail any such benefits. For qualifying it as your primary residence you should stay there for at least two to five years before selling it.
2) Deductible Mortgage Interest – Most of us get mortgage whenever we buy a home. Mortgage interest proves to be the largest tax deductions one can ever have. What is more? Interest you pay on mortgage for homes other than primary residence is also tax deductible. Even the payments made against your primary mortgages or home equity loans is deductible.
3) Losses Incurred In Real Estate are Tax Deductible- When you file your tax with IRS, you can claim your loss on real estate if the selling price of that real estate is less than what you paid for it. It would be deducted from your tax.
4) Save Taxes By Reinvesting In Real Estate- If the real estate you purchased is not primary residence of yours even then all your capital gains are not calculated in taxes as your profits. You need to reinvest your profits in an another real estate within a period of two years if the property you sold was not your primary residence. This way you can avoid capital gains tax on your property sales.
Therefore, you can understand the importance of understanding the semantics of tax deductions that are required to save a lot of money you would have paid otherwise as your capital gain tax. You should take advice of a good tax professional to avail many such real estate deductions that are there in the law.