Your condo is never just a home, even if it's your primary residence. It's also an investment — and one you can manage. It may sound confusing at first, but getting the most out of the federal tax breaks for homeowners can be simple. Many tax rules are conditional, so you'll want to meet with a professional if you're filing taxes or buying, selling or holding real estate. Here's what you should know to get that conversation started.
1. You Could Save Money Itemizing
To find out if it's worth going line by line rather than taking a standard deduction, you'll first need to determine what's eligible for a tax break. Then, add everything that’s eligible together and compare the final figure to your standard deduction. There are some costs you'll likely be able to deduct, such as mortgage interest and property taxes, and some you probably won't, such as HOA dues.
2. Renting Makes a Difference
Remember reading two seconds ago that you may not be able to deduct your HOA fees? Well, you could be able to claim normal assessments if you’re renting your property regularly to generate income.
3. You Could Face Different Rules Every Year
One of the rare constants of tax law is that it keeps changing. For example, you used to be able to claim mortgage insurance premiums on your taxes as deductions. But that has changed since 2017. It's always a good idea to take a fresh look at the new rules every year.
4. You Have to Include All Forms of Ownership
Do you own your own home, are you interested in taking out a mortgage for a second home, or might you be interested in buying an investment property? Whatever you choose, you'll need to pay tax on what you earn — including proceeds from rentals and sales — and deduct any cost of ownership that the IRS deems appropriate.
Real estate taxes aren’t the easiest to understand. But when you start looking at a specific financial situation, many discover that the hard part is finding a great investment in the first place. Why not start searching today?