
California Mortgage & Home Loan Rates Online
Always
with any home loan or major purchase you
should consult your tax advisor for advice about your personal situation.
The information below is strictly informational and may not apply
to your personal situation.
How is
the assessed value of a property determined?
In some states, the local tax assessor determines the assessed
value of a property, and uses that value to calculate the amount of tax
to be paid. In other regions, there is an automatic inflation percentage
added to the market value, which is the sale price of the home.
Your selling a house
and your going to sell it for more than you owe. Tax wise, what
does this mean?
Will this hurt you or will you be able to benefit from the capital gains.
Well you may be surprised to find out that you may not have a to pay taxes
on those capital gains, you may actually be relieved from paying taxes.
All of this relies on your tax professional, his advice and if....
- You owned and lived
in the house as your primary home for at least 2 out of the last 5 years.
- Your gain was less
than $250,000 (or $500,000 married filing jointly).
- You've not sold
another primary residence in the past 2 years before the sale.
- You have not depreciated
your home while using it in a business or rental activity.
- If you do not
meet any the above conditions, then you may have to pay taxes on part
of your capital gain.
What are the tax
benefits of home ownership?
Mention taxes, and most people are immediately stressed. Mention
tax benefits, however, and you will probably get a happier reaction. This
is a great advantage to home ownership. Along with being an investment,
home ownership can help you save money by offering tax breaks via certain
itemized deductions from your income tax. Talk in more detail to your
tax professional about these benefits.
Can I deduct the
home loan interest payments?
Interest that is paid on a first
mortgage, second mortgage, home improvement loan, or a home equity loan
can be tax deductible. First, the deductions are limited to a maximum
of two mortgaged residences. This may be a primary residence and one other
property, such as a vacation home. Rental and business properties are
not considered in this limit of two. The next limitation is the amount
of the debt.
Are there tax breaks for financial hardship home loans?
Low-to-moderate income homeowners may be eligible for mortgage
interest tax credits that are available for a portion of the interest
they pay.
What do property taxes cover?
It often depends on the area's tax base. In areas with a predominantly
residential property tax base, tax dollars go toward everything from the
fire department and schools to the town library. In other areas, industry
and commercial property take on more of the tax burden.
Which closing costs are tax-deductible?
Three closing costs are tax-deductible in the year of the sale: loan
points (one point equals 1 percent of your loan amount), prorated mortgage
interest, and prorated property taxes. After that, your mortgage interest
and annual property taxes are the only deductible costs. For a refinanced
loan, points must be deducted over time.
How are the funds from my escrow account used?
The funds from your escrow account are used to pay property taxes
and insurance. The payment is called an escrow payment, and a mortgage
lender withdraws the money.
What type of insurance do I need prior to closing?
You will need proof of homeowners, title insurance, and possibly
flood insurance (if applicable) prior to closing. If Private Mortgage
Insurance is required, your lender will make the arrangements.
Is Title Insurance always necessary?
Yes. The title is the formal document that establishes ownership
of property. Title insurance is necessary to make sure the title of the
property is clear of liens, easements or other claims that could affect
the transfer of the title. Title insurance covering the lender is always
required. Owner's coverage is available for a small incremental cost and
is highly recommended.
How will I know whether I need Private Mortgage Insurance?
In most cases, if your first mortgage amount is greater than 80%
of the property's value, the lender will obtain Private Mortgage Insurance
(PMI) to safeguard its investment against the possibility of default.
PMI premium is collected monthly along with the mortgage payment.