Capital Gains on SalesThe first $500,000 of profiton the sale of a home is excluded from taxation ($250,000 on a single return) if the following conditions are met:
- The property was your personal residence (not a vacation or second home) - but, with careful planning, you may be able to "convert" a vacation home to a primary residence.
- You owned and lived in it for at least two of the last five years before sale;
- It has been at least two years since you last sold a personal residence and used this exclusion.
This exemption applies to profits. The profit is the net of the sales price less closing costs, purchase price and the cost of improvements you made to home
Up to $1,000,000 of interest paid on home mortgage loans used buy or remodel is deductible
Up to $100,000 of interest paid on any home equity loan or line of credit is also deductible.
Points paid on home mortgages are deductible in the year they are paid.
Points paid by the Seller on the Buyers behalf are deductible by the Buyer!
Points paid to refinance are deductible, but must be pro-rated over the life of the loan.
You must report rental income on either your principal home or vacation home unless you rent it out for fourteen days or less. Short term rental income (less then 14 days per year) is tax free