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Can someone who knows the US tax laws help me out here?
I have heard that home loan repayments are tax deductible in the US - or at least they were 10 years ago.
Has this changed? Was I misinformed? Or is the interest on your home loan still deductible in the US?
Just to clarify - not loans for investment property, the loan on the house you live in.
As far as I know, the interest paid on home mortgage loans is still tax deductible.
Generally, you can deduct interest paid on a primary residence, but how much can vary from state to state, so it would be best to check with a tax professional where you live.
The US government has always believed that it is good for the citizens to own their own house. All the interest expense that is guaranteed by the value of your house is deducted.
Even if you buy a fancy car and put a second mortgage on your house to pay for it the interest on your first mortgage and second mortgage is deductible.
Also the profit from the sale of a home up to $250,000 (in profit) per person is untaxed. This would be $500,000 for a couple who sell their house. You must have lived in the house at least two of the last five years.
So if you bought a house for $50,000 thirty years ago and sold it for 600,000 as a single person you would be required to pay tax on 600,000 - 50,000 -250,000 or 300,000. as a married couple you would only need to income tax on $50,000.
I hope this answers your questions.
my two cents
The Federal laws on taxes are nationwide and do not vary from state to state. The state taxes are set by the states.
Another note about real estate loans.
Interest paid on investment property is deductible also. It is a business expense. Repairs and any legit expense is also deductible on investment property but not on personal residences.
How about interest in Australia?
What is deductible?
In Australia any expense is only deductible if it is directly connected to an income-earning activity.
You can deduct interest on money you borrow to invest (in anything), but not money you borrow to consume stuff (car, boat, credit cards, house you live in, etc).
If you are self-employed and need a vehicle for work you can deduct some of the car expenses, but you have to keep a log and you can't deduct the percentage that is personal use.
If you are an employee and the company provides a car, you (or the company, depending on how it is structured) have to pay Fringe Benefits Tax (at the highest marginal rate) unless you do a certain distance in the car each year. Just driving to and from the office is considered "personal use", so you have to drive further than that or you pay taxes on the car expenses at the full rate.
Basically, the Income Tax Act is enormous, draconian, and has very little leeway. Unless it makes you money, it's not deductible.
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