HOME INCOME TAX ISSUES

Introduction.

            The major tax planning issues to be addressed are when and how a client can plan the selling and buying of a personal residence, and how he can finance the acquisition or ownership in a manner that will result in the most favorable tax consequences while still meeting the client’s objectives.  Some of the rules regarding these issues include the following:

1.         The deductible expenses related to financing a house (house mortgage interest).

2.         Property tax deduction.

3.         The exclusion of $250,000/$500,000 gain on the sale of the house.

4.         The deductibility of certain expenses related to moving to a new residence where the move is work related.

5.         Special tax breaks enacted to address the sub-prime housing problems, including rules for clients losing a home in foreclosure or otherwise, deductions, credits, etc.