Homeownership Can Bring Big Savings at Tax Time

As the April federal income tax filing deadline approaches, millions of Americans are sitting down and sorting through dozens of forms to determine how much money they owe Uncle Sam – or, how much of a refund they will get this year. One of those forms, the Mortgage Interest Statement Form 1098, can mean big savings for home owners at tax time.

Form 1098, which home owners receive from their lenders, shows the total amount of home mortgage interest paid during the year. Home owners who itemize their federal income tax deductions can deduct 100 percent of their mortgage interest payments on a first or second home for up to $1 million of mortgage debt. They can also deduct the interest paid on up to $100,000 of home equity loans.

For most home owners, this means they can deduct ALL of the mortgage interest they’ve paid on their home each year.

The ability to deduct home mortgage and home equity loan interest isn’t the only tax benefit for home owners.

The three most important sources of tax savings for home owners are:

·      Deductions for mortgage interest

·      Deductions for real estate taxes

·      The capital gains exclusion for the sale of a principal residence

Home owners are also able to deduct the state and local real estate taxes they pay each year on an owner-occupied home.

When it is time to sell a home, in many cases home owners don’t have to pay capital gains tax on the profit from the sale. Under present law, married couples who have owned and occupied their principal residence for at least two of the past five years do not have to pay any taxes on the first $500,000 in profits from the sale of their home. Single filers earn up to $250,000 tax free.

Another deduction home owners may be able to take is for mortgage insurance premiums. Generally, people who purchase a home without putting 20 percent down have to buy mortgage insurance, and those premiums can also be deducted from taxable income.

Even home owners who don’t use the home as their principal residence and rent it out may be able enjoy some tax benefits, including interest and depreciation deductions.

 

Buying a home offers tax savings that can add up to tens of thousands of dollars over several years. Home owners rely on the mortgage interest deduction each year to help offset the costs of homeownership and prospective buyers take the deduction into consideration when choosing homeownership over renting.

But the mortgage interest deduction, which has been included in the tax code for about 100 years, is in danger. A national deficit commission has proposed reducing or eliminating the deduction as part of a restructuring of the tax code.

Find out more about the threat to the mortgage interest deduction, and read “The Tax Benefits of Homeownership,” a study from economists at the National Association of Home Builders that provides specific examples of savings for a variety of income levels and ownership situations, at www.SaveMyMortgageInterestDeduction.com.

Contact the Asheville Home Builders Association to find out about homeownership opportunities in the Asheville area.

Apartment Rent Estimator Shows Value of Specific Amenities

A new estimating tool by NAHB Economics lets builders and prospective renters gauge how much certain amenities add to typical apartment rents across various regions.

In October of 2011, NAHB released an updated version of our statistical model for estimating the average price of a single-family home (see NAHB House Price Estimator, Updated). This week, we followed up with another great estimating tool that's designed to estimate average gross rent for an apartment in a building with five or more housing units. Like the house price model, the NAHB rent estimator is calibrated with data from the American Housing Survey (AHS), a nationally representative survey of housing units conducted by the U.S. Census Bureau and funded by HUD. And similar to the house price model, the rent estimator is available online in a form that readers with compatible web browsers and Internet service providers can access and run interactively.

By using the NAHB rent estimating model, builders and prospective renters can get an idea of how the addition of a particular amenity affects the rents charged and paid for similar apartments in the region. Developers looking to expand into other areas and relocating households can use the model to compare rents for a particular type of apartment across broad geographical regions. Owners of rental properties may use it to judge how a particular renovation would tend to increase the rent they could charge. And finally, property owners and local governments may use it to study how neighborhood characteristics impact rents. Below are a few quick highlights of the rent estimator's findings:

* The highest estimated gross rent for a standard new apartment can be found in the metropolitan California region, with the next highest estimated gross rent being found in the Northeast.
* Adding a third bedroom to a standard new apartment built in a Southern suburb adds $78 per month to gross rent, while omitting one of the two full baths found in the study's "standard apartment" reduces gross rent by $73.
* Locating a standard new apartment in a neighborhood with satisfactory shopping, such as grocery stores and drug stores, adds $53 per month to gross rent in a southern suburb.
* The presence of trash or litter in the neighborhood reduces estimated gross rent for the standard new apartment in a southern suburb by $11.
NAHB members can access the NAHB Rent Estimator tool free of charge at: www.nahb.org/rentestimatorreport.

This article was printed with permission from the NAHB

Becoming Involved in the Asheville HBA

There are so many different ways to get your business in front of the consumer these days, but what about other companies? Here at the Asheville Home Builders Association we are working hard to help our members to become more involve with the Asheville HBA and with other member companies.

What are the different way that you can get involved?

Join a Committee
     The committees of the Asheville  Home Builders Association are the "backbone" of the organization.  In order for the AHBA to effectively promote the home building industry and continue to provide outstanding services and support to the membership, your help as a member and industry professional is needed through volunteering for one of the  AHBA Committees.  Serving on any of these committees can provide you unique and valuable opportunities to network with industry peers, gain valuable exposure for you and your company, develop leadership skills and serve your industry, the association and your community.  Volunteers of the AHBA Committees work together to bring new ideas and programs to the general membership. Want to learn more about each committee and how to sign up? Click here for a full description of the AHBA Committees.

Follow us on Social Media
     Asheville Home Builders in on Twitter, Facebook, and now Linkedin. Join the conversation and see all the latest news and updates as they happen. There is no easier way to learn about what is new then by joining in the discussion!

Come to Networking Nights
     Once a month the opportunity arises for Member Companies to attend events or meetings designed for industry professionals like yourself to connect with other AHBA members. All networking nights are free to members, and provide news and updates for in the Home Building Industry as well as valuable networking time. The next meeting will be held January 19th at the Doubletree in Biltmore Town Square.

Interested in other ways that you can become involved in the Asheville Home Builders? Visit our website to see all the ways the AHBA can help your business!