How To Make Your Home Work For You

If you’re a homeowner, there are many tax loop holes that can help your home make money for you:

1. If you’ve lived in your home for two years, you can take a tax-free gain of $250K for a single filer and $500K for married (filing jointly). You just have to have used the property as your principal residence for two of the past five years. You can even rent your house out for most of that period and still qualify for the full gain!

2. If you’ve lived in your home for less than two years, you can still take a “reduced exclusion amount” (pro-rated from the full amount according to how long you’ve lived there) if you’re “forced” to move because of “unforeseen circumstances” – which can simply mean that you’ve started (or ended) a home-based business.

3. If you’ve lived in your home more than two years, you can always re-finance it to remove the value. If the current market interest rates are higher than your existing loan, for instance, get a home equity loan instead. Once your gain approaches $250K if you’re single (or $500K if married), it’s time to move.

4. If you decide to rent out a room in your house, you’ve created a home business from which you can deduct relevant expenses against the rental income, as well as the depreciation of the space. And when you sell the house, you can exclude the gain on the pro-rated portion.

5. If your income grows so high that you begin to lose itemized deductions, you can always move the mortgage interest deduction off Schedule A by using the home office deduction, which allows you to deduct a pro-rated portion of the mortgage interest and property tax on a separate schedule.

6. If you wish to take out a home equity loan that’s fully deductible, simply demonstrate that the additional debt above the amount allowable was used for business or investment purposes – such as buying in to an apartment building.

Disclaimer: This article is provided for information use only. It does not take the place of an attorney, a tax advisor, or an accountant. Always seek out the advice of a licensed professional before undertaking any significant change in your financial situation.

We at Valerie Fitzgerald and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy.  Should you have any questions, please feel free to email us at info@valeriefitzgerald.com or call us directly at 310-285-7515.  If you or anyone you know is looking to buy or sell a home, please note that we can provide detailed information and access to

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