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The Homeownership Dream

by Kathy and Michael Rain - The Rain Team

Don’t Get Sidelined

by Kathy and Michael Rain - The Rain Team

Are Closing Costs Tax Deductible Under The New Tax Law?

by Kathy and Michael Rain - The Rain Team

Are closing costs tax deductible? What about mortgage interest? Or property taxes? The answer is, maddeningly, “It depends.”

Basically, you’ll want to itemize if you have deductions totaling more than the standard deduction, which is $12,000 for single people and $24,000 for married couples filing jointly. Every taxpayer gets this deduction, homeowner or not. And most people take it because their actual itemized deductions are less than the standard amount.

But should you take it?

To decide, you need to know what’s tax deductible when buying or owning a house. Here’s the list of possible deductions:

Closing Costs

The one-time home purchase costs that are tax deductible as closing costs are real estate taxes charged to you when you closed, mortgage interest paid when you settled, and some loan origination fees (a.k.a. points) applicable to a mortgage of $750,000 or less.

But you’ll only want to itemize them if all your deductions total more than the standard deduction.

Costs of closing on a home that aren’t tax deductible include:

Real estate commissions
Appraisals
Home inspections
Attorney fees
Title fees
Transfer taxes
Mortgage refi fees
Mortgage interest and property taxes are annual expenses of owning a home that may or may not be deductible. Continue reading to learn more about those.
Mortgage Interest

Yearly, you can write off the interest you pay on up to $750,000 of mortgage debt. Most homeowners don’t have mortgages large enough to hit the cap, says Evan Liddiard, CPA, director of federal tax policy for the NATIONAL ASSOCIATION OF REALTORS®. But people who live in pricey places like San Francisco and Manhattan, or homeowners anywhere with hefty mortgages, will likely maximize the mortgage interest deduction.

Note: The $750,000 cap affects loans taken out after Dec. 17, 2017. If you have a loan older than that and you itemize, you can keep deducting your mortgage interest debt up to $1 million. But if you re-fi that loan, you can only deduct the interest on the amount up to the balance on the day you refinanced – you can’t take extra cash and deduct the interest on the excess.

Home Equity Loan Interest

You can deduct the interest on a home equity loan or a second mortgage. But — and this is a big but — only if you use the proceeds to substantially improve your house, and only if the loan, combined with your first mortgage, doesn’t add up to more than the magic number of $750,000 (or $1 million if the loans were existing as of Dec. 15, 2017).

If you use a home equity loan to pay medical bills, go to Paris, or for anything but home improvement, you can’t write off the interest on your taxes.

State and Local Taxes

You can deduct state and local taxes you paid, including property, sales, and income taxes, up to $10,000. That’s a low cap for people who live in places where state and local taxes are high, says Liddiard.

Loss From a Disaster

You can write off the cost of damage to your home if it’s caused by an event in a federally declared disaster zone, like areas in Florida after Hurricane Michael or Shasta County, Calif., after a rash of wildfires.

This means standard-variety disasters like a busted water pipe while you’re on vacation or a fire caused because you left the toaster on aren’t deductible.

Moving Expenses

This deduction is also only for some. You can deduct moving expenses if you’re an active member of the armed forces moving to a new station.

And by the way, no matter who you are, if your employer pays your moving expenses, you’ll have to pay taxes on the reimbursement. “This will be a real hardship to many because it’s non-cash income,” says Liddiard. Some employers may up the gross to provide cash to pay the tax, but many likely will not.

Home Office

This is a deduction you don’t have to itemize. You can take it on top of the standard deduction, but only if you’re self-employed. If you are an employee and your boss lets you telecommute a day or two a week, you can’t write off home office expenses. You claim it on Schedule C.

Student Loans

Anyone paying a mortgage and a student loan payment will be happy to hear that the interest on your education loan is tax-deductible on top of the standard deduction (no need to itemize). And you can deduct as much as $2,500 in interest per year, depending on your modified adjusted gross income.

Ways to Increase Your Eligible Deductions

There are some other itemize-able costs not related to being a homeowner that could bump you up over the standard deduction. This might allow you to write off your mortgage interest. Charitable contributions and some medical expenses are itemize-able, although medical expenses must exceed 7.5% of your adjusted gross income.

So if you’ve have had a hospital stay or are generous, you could be in itemized-deduction land.

Also, if you’re a single homeowner, it could be easier for you to exceed the standard deduction, Liddiard says. The itemized deductions on your house will probably more quickly break the $12,000 standard deduction threshold than a couple’s similar house will break their $24,000 threshold.

Tax-Savvy Home-Buying Ideas

If you’re a prospective homeowner with an eye to making the most efficient use of your tax benefits, here are a few ways to buy smart:

Especially in expensive areas, buy a less expensive home so you don’t hit the cap on mortgage debt and local and property taxes, says Lisa Greene-Lewis, a CPA and tax expert for TurboTax.
If you’re buying a higher price home, make a bigger down payment so your original mortgage doesn’t exceed the $750,000 cap.
How to Decide If You Should Itemize

Though every homeowner’s tax benefits will be a little different, in the end, you’re building equity, you’ll likely make money when you sell, and you have the freedom to paint your walls any color you want and get a dog.

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School is Cool

by Kathy and Michael Rain - The Rain Team

Home Buyer Blunders

by Kathy and Michael Rain - The Rain Team

Down Payment Dilemma

by Kathy and Michael Rain - The Rain Team

Homebuying Mistakes By Generation

by Kathy and Michael Rain - The Rain Team

Bay Area home prices soar to new record

by Kathy and Michael Rain - The Rain Team

April 24, 2018  | San Francisco Chronicle

The median Bay Area home price surged to an all-time high of $820,000 in March, up 9.3 percent from February and up 14.7 percent from March of last year, research firm CoreLogic reported Tuesday.

The previous peak was $784,000 in November. The report includes newly built and existing homes and condos sold in all nine counties. For the past six months, the median price has risen 12.8 percent year over year on average.

For the fourth consecutive month, Santa Clara and San Mateo counties showed the steepest year over year gains: 33.6 and 25.7 percent, respectively.

See The Full Article

16th Annual San Mateo Wine Walk

by Kathy and Michael Rain - The Rain Team

The Annual San Mateo Wine Walk returns this Saturday. The party gets underway at 2pm at the registration area at 1st and Ellsworth Avenues [map]. The Downtown San Mateo Association is hosting the event which is now in its 16th year! There will also be an exclusive celebration in the VIP Lounge with sumptuous food, signature drinks, swag bags and live music, in addition to your ticket and a free glass at the Wine Walk. Tickets, $35 or $65 for admission to the VIP Lounge, can be purchased online at EventBright. Tickets the day of the event are $45.

Kathy and Michael Rain, REALTORS®
The Rain Team, Coldwell Banker Real Estate
CRS, GRI, SRES, Previews, ASP

Michael DRE#01125976 Kathy DRE#01169588
Email:
TheRainTeam@Coastal-RealEstate.com
Cell Phone: (650) 888-6903
Direct Phone: (650) 712-0411

Home Office: (650) 728-7123
Fax: (866) 396-0207

www.Coastal-RealEstate.com

www.SanMateoCoastRealEstate.com   

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Kathy and Michael Rain offer their real estate services for buyers, sellers, investors in the Half Moon Bay, El Granada, Moss Beach, Montara, Pacifica and San Mateo, California area.    

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This blog is maintained by Michael of Kim Hughes & Company.
Image courtesy San Mateo Wine Walk

Celebrate the Green Foothills

by Kathy and Michael Rain - The Rain Team

For fifty years, the Committee for Green Foothills has been working toward open space protection and preservation. Now, they're inviting you to celebrate their golden anniversary with an afternoon of festivity. The party takes place from 2:30pm to 6pm on the beautiful rolling hills of Runnymede Farm [map].This Woodside estate is home to over 115 sculptures by renowned artists such as Jun Kaneko, Viola Frey, and Andy Goldsworthy. Take this opportunity to visit our History Corner and hear stories from environmental heroes, including Martin Litton, Tom Jordon, Don Aitken, and others. In addition to enjoying the fascinating artwork, scrumptious food, spectacular open space, and wonderful people, guests will be treated to an inspirational program by authors Jon Christensen and Lynn Stegner. Tickets can be purchased online.

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And also, a quick congratulations to the 1987 graduates of San Mateo High School, celebrating their 25th year reunion with a picnic Saturday this weekend! Go Bearcats!

Kathy and Michael Rain, REALTORS®
The Rain Team, Coldwell Banker Real Estate
CRS, GRI, SRES, Previews, ASP

Michael DRE#01125976 Kathy DRE#01169588
Email:
TheRainTeam@Coastal-RealEstate.com
Cell Phone: (650) 888-6903
Direct Phone: (650) 712-0411

Home Office: (650) 728-7123
Fax: (866) 396-0207

www.Coastal-RealEstate.com

www.SanMateoCoastRealEstate.com   

Like us in Facebook
Follow us on Twitter

Connect with Us on LinkedIn

Subscribe to our You Tube Channel

Kathy and Michael Rain offer their real estate services for buyers, sellers, investors in the Half Moon Bay, El Granada, Moss Beach, Montara, Pacifica and San Mateo, California area.    

***

This blog is maintained by Michael of Kim Hughes & Company.
Images courtesy Committee for Green Foothills, San Mateo High School

Displaying blog entries 1-10 of 12

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Photo of The Rain Team Real Estate
The Rain Team
CA# 01169588 | CA# 01125976 | CA# 01908304
248 Main Street, Suite 200
Half Moon Bay CA 94019
Michael: 650-888-6361
Kathy: 650-888-6903
Fax: 866-396-0207

Kathy and Michael Rain of Coldwell Banker provides real estate services in the San Mateo County, California area including the surrounding communities: El Granda, Half Moon Bay, Montara, Moss Beach, Pacifica and San Mateo. Search for homes in San Mateo County. We list and sell residential real estate, investment properties, vacant land, lots for sale in the San Mateo County, California area.

Licensed in the State of California

Kathy Rain - CA BRE# 01169588 | Michael Rain - CA BRE# 01125976 | Coldwell Banker - CA BRE# 01908304
Cell Phone: (650) 888-6903 * Direct Phone: (650) 712-0411
San Mateo County Real Estate and Homes for Sale

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