The ownership of a personal residence can have important tax considerations. Examine possible tax deductions for interest expense and real property taxes and the possibility for residential energy credits.
If the home is used for business purposes, business deductions may be available but subject to the “home office” rules. Rental of the personal residence requires consideration of the vacation home rules; if a loss occurs, the passive activity loss limitation is considered. Review and evaluate issues to identify possible tax planning opportunities or strategies.
Determine the tax deductibility of interest expense related to debt secured by the residence.
Evaluate deduction available for real property taxes.
Consider possible tax savings from residential energy credit.
Recognize and apply the ‘home office’ deduction limitation for business use of principal residence.
Evaluate the tax consequences of renting a principal residence for all or part of the taxable year.
Consider how the casualty loss rules apply to principal residences.
Deduction of “home mortgage interest”
Deduction of real property taxes taxes
Residential energy credits
Use of the home for business purposes, ‘home office’ complication
Rental of a principal residence, the vacation home complication
Rental of principal residence with a resulting loss, the passive activity limitation
CPAs, lawyers, tax practitioners and financial advisers.
Basic understanding of the federal income tax law as applied to individual taxpayers.