Principal Residential Mortgage
Fill out the form below for your question on mortgage and you will be contacted shortly by one of our qualified financial advisors.
Tax Breaks On Your Principal Residential Mortgage Property
Your home, on which you hold your principal residential mortgage, could be the key to a healthy retirement fund. Up to $500,000 in profit from the sale of your home can be excluded from your income and cannot be taxed!
This little known fact is as a result of the Taxpayer Relief Act of 1997. Of course, there are certain criteria that owners of the property have to meet to qualify for this tax break, but the law is far wider reaching than the replacement residence rule it replaced. Although it has been in existence for over eight years, people still don't know that the nice little nest egg that has built up in equity in the property that they hold their principal residential mortgage on, can actually be obtained tax free when they sell it!
There are limits to the amount of gain that can be excluded from your income so that you do not have to pay federal taxes. If you make gains above this limit, you will be taxed only on the profit that goes above this ceiling. This ceiling is dependent upon your personal circumstances:
There are a few simple qualifications for this substantial tax break:
Another very important point to remember is that you can qualify for this tax break again after another two years. For example, if you have sold your principal residence and move into your holiday home which you had a 2 nd mortgage on, this now becomes your principal residential mortgage property. After two years you can sell the property and benefit from these tax breaks again! Please consult with a lawyer to see whether you can qualify for this Tax relief act.