Proven tax strategies any homeowner can use to maximize the benefits of owning a home "Robinson walks the reader through almost every conceivable scenario that could result in a lower tax bill." —Ilyce Glink, Tribune Media Services J.K. Lasser's Homeowner's Tax Breaks 2006 provides a straightforward and accessible look at the legitimate tax strategies any homeowner can use to save on their taxes. This comprehensive guide reveals a multitude of both well-known and little-known tax-saving ideas that will allow you to put substantial dollars back where they belong—in your pocket. Filled with in-depth insights and practical advice, J.K. Lasser's Homeowner's Tax Breaks 2006 will help you: Legitimately take deductions for your household when you have a home office Make your credit card and car loan interest deductible Qualify to exclude up to $250,000 of gains on the sale of your home—$500,000 if you're married Cope with a depressed housing market by getting deductions for renting your home before you sell it Create tax-free income from renovating your home and selling it at a profit Receive charitable deductions on your home while you're still living in it Make your home a retirement nest egg that generates tax-free income by trading down or using it for a reverse mortgage Eliminate estate tax on your principal residence by utilizing a personal residence trust J.K. Lasser—Practical Guides for All Your Financial Needs Please visit our Web site at www.jklasser.com
Author(s): Gerald J. Robinson
Edition: Revised
Year: 2005
Language: English
Pages: 270
J.K. Lasser's Homeowner's Tax Breaks 2006: Your Complete Guide to Finding Hidden Gold in Your Home......Page 5
About the Author......Page 7
Acknowledgments......Page 9
Preface......Page 13
Contents......Page 15
Part I: Sheltering Your Income with Home Deductions......Page 21
1.1 Overview......Page 23
1.2 Real Estate Taxes in the Year You Buy: Get Your Proper Share......Page 24
1.3 Mortgage Points: How to Assure Deduction......Page 27
1.4 Moving Expenses: Does Your Move Qualify for Deduction?......Page 30
1.5 How Should Married Couples Take Title to Their Home?......Page 32
1.6 Purchase Expenses: The Importance of Records......Page 33
1.7 Helping with the Down Payment: First-Time Homebuyer’s IRA Break......Page 34
1.8 Purchaser’s Tax-Planning Checklist......Page 36
2.1 Overview......Page 38
2.2 Planning to Maximize Deductions......Page 39
2.3 Deduct All Your Real Estate Taxes......Page 40
2.4 Tax Magic of Home Mortgages: Your Interest Deductions......Page 41
2.5 Refinanced Home Mortgage—Watch Out for Interest Deduction and Points......Page 42
2.6 Home Damaged? Let the IRS Help Pay!......Page 44
2.7 How to Boost Your Damage Loss Deduction......Page 49
2.8 When Your Damage Is from a Presidentially Declared Disaster......Page 51
2.10 Eligibility of Employees......Page 53
2.11 Eligibility of Business Owners......Page 55
2.12 Figuring the Deduction......Page 57
2.13 If You Work outside Your Home: How to Get Home Office Deductions......Page 66
2.14 How Home Office Makes Commuting Costs Deductible......Page 68
2.15 Deduct Your Home Office Equipment Cost—Up Front......Page 70
3.2 How to Get Tax-Free Income from Short-Term Rental......Page 72
3.3 How to Make Your Credit Card and Car Loan Interest Deductible......Page 74
3.4 How to Deduct Cost of Medical Home Improvements......Page 78
3.5 Deductible Home Improvements for the Disabled......Page 81
3.6 How an Employee Gets a Tax Break for a “Sideline” Business......Page 82
3.7 Deduction of Fees for Home Tax Advice......Page 85
3.8 Tax-Wise Borrowing against Your Home for Business......Page 86
3.9 Renting a Part of Your Home......Page 88
3.10 Renting Your Entire Home......Page 89
3.13 Suing the Builder: Tax-Free Proceeds......Page 94
Part II: Tax Shelter When You Sell Your Home......Page 97
4.1 Overview......Page 99
4.2 How to Plan for the Sale......Page 100
4.3 Exclusion of Up to $250,000 or More of Gain......Page 101
4.4 How to Qualify for the Exclusion......Page 103
4.5 Exceptions to the Two-Year Rule: Job Change, Health Problems, or Unforeseen Circumstances......Page 106
4.6 Married Couples: How to Get the $500,000 Exclusion......Page 111
4.7 Is Your Home Your “Principal Residence”?......Page 115
4.8 Your Home Office: Does It Qualify?......Page 117
4.9 Vacant Land Can Qualify......Page 118
4.10 Snowbirds: How to Deal with the Southern Home Trap......Page 119
4.11 Gain in Excess of the Exclusion......Page 120
4.12 Member of Uniformed Service or Foreign Service......Page 122
4.13 How to Cope with a Depressed Market by Rental before Sale......Page 123
4.14 How to Avoid Reporting to the IRS......Page 124
4.15 Seller’s Tax-Planning Checklist......Page 128
4.16 Checklists for Qualification for $250,000/$500,000 Exclusion......Page 129
5.1 Overview......Page 131
5.2 Upper-Middle-Class Victims......Page 132
5.3 Tax Time Bomb......Page 133
5.4 Tax Idea 1: Deferred Sale Approach......Page 134
5.5 Tax Idea 2: The Leasehold Carve-Out......Page 135
5.6 Tax Idea 3: The Installment Sale......Page 138
5.7 Tax Idea 4: Conversion to Rental and Exchange......Page 142
5.8 Tax Idea 5: Exchange Home Used Partly for Business for Another Home Used Partly for Business......Page 143
5.9 Summing Up......Page 146
6.2 Don’t Lose the Exclusion on Principal Residence Sale!......Page 154
6.3 Transfer of Home to Spouse......Page 155
6.4 Is It Smart to Sell Prior to Divorce?......Page 156
6.5 How to Avoid Gain on a Vacation Home......Page 157
6.6 Splitting Up Marital Property: Beware the Tax Trap......Page 158
Part III: Tax Shelter from Homeowner Loopholes and Vacation Homes......Page 163
7.2 The Super Loophole: How to Use Home Sale Exclusion to Shield Gain on Other Real Estate from Tax......Page 165
7.3 How to Buy a Vacation Home with Tax-Free Dollars from Sale of Rental Property......Page 168
7.4 Avoiding Tax When Your Land Includes Both House and Investment Property......Page 172
7.5 Your Appreciated Residence Is a Tax Treasure: How to Trade Up and Get Tax-Free Cash......Page 174
7.6 Home Improvements: Handyman’s Special Tax Shelter......Page 175
7.7 Home Improvement Business: Tax-Free Income for Renovators......Page 177
7.8 When a House Is Not a Home—How to Deduct Loss on Sale of Home......Page 178
7.9 How to Get a Charitable Deduction for Your Home—And Still Live in It......Page 180
7.10 Every Homeowner’s Hidden Loophole: Nontaxable “Imputed” Income......Page 184
8.1 Overview......Page 187
8.2 Scenario 1: Use of Vacation Home Exclusively as Vacation Home......Page 188
8.3 Scenario 2: Use for Vacation and Rent for 14 Days or Less......Page 189
8.5 Tax Loss from Rental Not Allowed......Page 190
8.6 Figuring the Amount Deductible......Page 193
8.8 Need for Profit Motive......Page 197
8.9 Figuring Amount of Tax Shelter......Page 198
8.11 Depreciation: The Deduction without Cash Outlay......Page 200
8.12 Tax Shelter Rules......Page 204
Part IV: Retirement Benefits and Estate Planning......Page 207
9.1 Overview......Page 209
9.3 How Trading Down Increases Cash Flow......Page 210
9.4 How Much Cash from Trading Down?......Page 211
9.5 The Tax Benefit......Page 212
9.7 What Is a Reverse Mortgage, Anyway?......Page 213
9.8 The Tax Benefit......Page 214
9.9 How Much Cash Flow Can You Get?......Page 215
9.10 What Type of Reverse Mortgage Is Best for You?......Page 216
10.1 Overview......Page 218
10.2 Should Spouses Own Home Jointly?......Page 219
10.3 Do You Need Estate Tax Planning?......Page 220
10.4 Larger Estates: How Not to Lose the Second Exemption......Page 222
10.5 How Parent Can Cut Taxes on Vacation Home......Page 224
10.6 Estate Planning for a Parent’s Home: Using Sale–Leaseback to Shift Appreciation in Value......Page 227
10.7 How Parents Can Escape Estate Tax on Their Homes: The Qualified Personal Residence Trust......Page 231
Epilogue......Page 237
Appendix A......Page 239
Appendix B......Page 245
Appendix C......Page 267
Index......Page 281
