I have 3 kids and my husband and I are trying find a way for me to quit working to be a stay at home mom. The only way we see that it will be possible, is to lower our overhead by selling our huge house and downsizing.
My question is, how hard will we be hit during tax time because of this? Since we have always had the interest to claim on our taxes we have always gotten money back and this year we added another baby, but I am unclear as to how "renting" and not "owning" will affect us.
2007-03-21 10:54:24 · 5 answers · asked by CeciGirl 1 in Business & Finance ➔ Taxes ➔ United States
To be exempt from capital gains tax, you must have resided in the home for at least two years... What about purchasing a smaller home? Renting removes any tax deductions that you were receiving for the mortgage on your house... However, you truly need to consult a tax professional with all of your tax information to get a clear picture as to what you would be looking at.
However, if you click on the below link, you can find a way to get your tax expenses paid for this year...
2007-03-25 04:45:54 · answer #1 · answered by John M 2 · 0⤊ 0⤋
I would need to see last year's tax return to determine how much tax benefit you received from the mortgage interest and real estate tax deductions.
In most cases, the tax benefits of the mortgage interest deduction and real estate taxes are overrated. Only the itemized deductions in excess of $10,300 do you any good.
If you could downsize to a less expensive home that you purchased, you may retain tax benefits and reduce expenses.
If you choose to sell your home and rent, do a mock tax return for next year to see the results, then go ahead knowing what the impact will be.
2007-03-21 11:26:25 · answer #2 · answered by ninasgramma 7 · 1⤊ 0⤋
If its a huge house, and you have a lot of equity you dont have to pay taxes on the first $500,000 in gain on the sale. So it seems like that profit now may be better than writing off interest on the original cost. at whatever your tax rate is.. A dollar now is worth more than a dollar later. As to renting I dont know if that would be a good idea. It might be better to use the money to buy a smaller house.
2007-03-21 12:58:18 · answer #3 · answered by jeff410 7 · 1⤊ 1⤋
in case you're in basic terms going to be interior the homestead for some months, hire. Or in case you ought to hire with the alternative of paying for for that homestead, do this. area leases will many times be taken off of the interior maximum loan. in case you're heavily seeking to purchase a house with out renting, do this. yet locate out each and every thing you could regarding the area first. Is the homestead in a flood area? What approximately sink holes? do you want something kind new? Or a fixer top? in case you walk extremely of stress, is the homestead close to everythig you want? shops? colleges? be certain the homestead hasn't had any fires. If it has, you will locate it extra durable to insure. Asking the main magnificent questions now will save you lots of heartache later.
2016-11-27 20:26:25 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Without knowing the size of your interest deduction, your total itemized deductions, and your total income, it's not possible to give you any kind of estimate of the tax impact.
2007-03-21 11:01:17 · answer #5 · answered by Bostonian In MO 7 · 1⤊ 0⤋