Home owner tax benefits

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Author: Paul Escobedo

Article source: http://www.articledeshboard.com/. Used with author's permission.

California is a prime location for real estate investors and many people are seen to relocate here in search of new job opportunities. There is a constant demand for housing and a lot of new construction is happening everywhere in this State. New California homes offer a lot to homeowners in terms of comforts and facilities.

As a California home owner, you need to be aware of the taxes that you will need to pay on your property. Paying taxes on your property is a must by law and penalties applied for non-compliance on federal and state tax laws. However, though paying tax is an expense, certain tax laws which allow you to be exempted from tax payment under certain conditions.

The purpose behind tax benefits is to encourage home ownership. Here is a look at tax deductions or benefit for California Homeowners:

• Interest paid on home mortgage is tax deductible.
• You can deduct amount paid towards late payment on home mortgage.
• In case you prepay your home mortgage, you can deduct prepayment penalties from your taxes.
• In case of a 1031 property exchange you are exempt from paying tax in the year of exchange; a like property is exchanged for your like property.
• Any loans taken for home improvement or refinancing origination points can be deducted from taxes.
• Real estate property taxes are deductible.
• In the event of a sale of primary residence, capital gain of about $500,000 is exempt from taxes for married couples and capital gain of about $250,000 for single individuals.

If you wish to avail the tax benefits available to you, consult a real estate accountant who is well-informed on laws allowing tax deductions and who will assess how such deductions apply in your situations. If any recent laws enabling new tax deductions have come up they will notify you on those as well. Tax deductions can cut down tax payment expenses considerably. If you are not aware of them, you end up incurring expenses when in reality you could use such funds elsewhere, for another productive or critical expense.

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