Federal income tax question

sconti_95February 2, 2007

My wife and I sold our home that we bought in 1990 this past year (2006) and bought a new home a couple of miles away. In reviewing the settlement statements on both the the sold and bought homes, what costs may I deduct on my Federal income tax. I am getting ready to file my federal income tax for 2006 and want to be sure that I do not miss out on any deductions. Thank you in advance for your help.

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davidandkasie

for the sale, you can't deduct much of anything. if you sold for a profit, it is actually income. you can deduct points paid on the buy though, and of course your interest.

    Bookmark   February 2, 2007 at 11:49AM
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mahatmacat1

It's income, but IIRC if it was your primary residence you can keep the first $250K in profit without any tax. Only over 250K of profit is it taxed.

NOT LEGAL ADVICE but my experience. I would really recommend going to the bookstore and looking for a book on real estate tax issues. Don't have to buy it, just settle down with a latte and commit it to memory :)

    Bookmark   February 2, 2007 at 1:27PM
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sconti_95

davidandkasie and flyleft: Thank you both for the information. Did not pay any points and will include the interest on the mortgage. How about state tax/stamps along with recording fees? How about Title insurance? These are high cost items and was hopeful they would be deductible. Again, thanks. Now for the latte.

    Bookmark   February 2, 2007 at 2:17PM
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kudzu9

sconti-
There are many things you can factor in to minimize your capital gain on the house you sold if the profit exceeds the $500K exemption for a married couple. Start by taking a look at the IRS publication link below. Then, when you think you understand it, invest an hour with a CPA to make sure you've got everything you've entitled to. As far as the house you just bought, the deductions are going to be interest and property taxes.

Here is a link that might be useful: Selling your home.

    Bookmark   February 2, 2007 at 2:54PM
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patser

From a federal tax standpoint, I believe the only deductible expense are the points on a new mortgage. All the other higher $$ closing costs are just simply out of pocket.

If, however, you made any energy savings improvements in your old house in 2006, you may be eligible for tax credits relating to the cost of certain of them. The IRS has info on their site.

Happy tax filing!

    Bookmark   February 3, 2007 at 7:17AM
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kudzu9

Before you deduct points, you should determine if they qualify or not.

Here is a link that might be useful: IRS: Home Mortgage Points

    Bookmark   February 3, 2007 at 3:12PM
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