Chesapeake Homes

Three Tax Myths about Owning Your Home

One of the main reasons people give for owning a home rather than renting is because of the tax deductions you can get as a result of being a homeowner. But even though there are many tax advantages to owning a home, some of those advantages that you may have heard about are simply not true. Here are three common tax myths that you may have heard about that are just a myth.

1. I can deduct any expense related to my home. This is a common myth that many homeowners have believed for years but it simply is false. Fees like housing association fees and property insurance are not deductible on your taxes. You also cannot deduct your private mortgage insurance, basic maintenance costs, repairs or home improvements. If you try to deduct these expenses, you should expect a letter from the IRS.

2. I should put my child's name on the home for tax purposes. Putting one of your children's names on your home to avoid probate or for any other reason can create more tax and estate problems than it solves. Your son or daughter will not get the residential tax break unless they have moved in with you and lived there for two consecutive years in the last five years. If certain conditions are not met, the property will be viewed as an investment property rather than a personal residence.

3. I can write off a capital loss after selling my home. Although it sounds ideal, this myth is just that - a myth. If you sell your home for less than the price you paid for it, your loss is not eligible for a deductible loss. According to tax law, you cannot deduct personal property when you sell it at a loss.

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