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Shifting Debt to Tax Deductible

The Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home.  They can also deduct interest on up to an additional $100,Shifting Debt to Tax Deductible000 of Home Equity debt.

While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose.  It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards.

A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it’s would now be tax deductible.

If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered.
Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 page 10 and consult your tax professional.

By |April 23rd, 2013|Categories: Borrowers|Tags: , |0 Comments

Mortgage Debt Relief Act Extended Through 2013

Good News!

Lawmakers managed to extend the Mortgage Forgiveness Debt Relief Act as part of their 11th hour deal to avoid the fiscal cliff. For those owners contemplating a short sales, this means that you may not be liable for taxes on debt forgiven.  The law, established in 2007, was set to expire Dec. 31, 2012 and was extended for another year.

For sellers, the Act only applies if you lived in the property as your personal residence for two of the five last years and it only applies to purchase money or money used to make capital improvements to the property.

Always consult a legal professional when reviewing the option of a short sale.

Mt Hood Real Estate For Sale in the Villages of Mt Hood includes:

It is an excellent time to buy with interest rates the lowest they have been in close to FIFTY (50) Years….still!!!

When looking for Mt Hood Real Estate come to MtHoodRealEstate.net for the latest information

By |January 6th, 2013|Categories: Uncategorized|Tags: , |0 Comments