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IRS Okays home equity deductions

Posted by Zinner & Co. Tax Department on Jun 7, 2018 12:30:00 PM

The Tax Cuts and Jobs Act of 2017 affected the tax deduction for interest paid on home equity debt as of 2018.

Under prior law, you could deduct interest on up to $100,000 of home equity debt, no matter how you used the money. The old rule is scheduled to return in 2026.

The bad news is that you now cannot deduct interest on home equity loans or home equity lines of credit if you use the money for college bills, medical expenses, paying down credit card debt, etc.

The good news is that the IRS has announced “Interest on Home Equity Loans Often Still Deductible Under New Law.”

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Topics: real estate, financing, Taxes - Planning, Rules and Returns, Taxes - Individual, home, Tax Cuts and Jobs Act of 2017

Can You Deduct Your PJs and Coffee? Getting Creative with Home Office Deductions

Posted by Zinner & Co. Tax Department on Jun 24, 2016 8:30:00 AM
If you regularly work from home, you may be able to take advantage of a deduction for the business use of your personal residence. The home office deduction, however, has some specific requirements you should be aware of before claiming it on your tax return.
 
Do I Qualify?
 
To qualify, there are some basic requirements must be met.
 
1. The part of your home used to calculate the home office deduction must be used regularly and exclusively for business. In other words, the space must be used exclusively as your office, and not a kitchen table that you work at from time to time.
However, there are two exceptions. If you run a daycare facility from your home or store inventory or product samples there, you don’t have to meet the exclusive use test.
 
2. The office must either be your principal place of business or a space where you meet clients or customers. Part of your home may qualify as your principal place of business if you conduct administrative or management activities there, as opposed to running your c
ompany entirely from another location. The office doesn’t even have to be the only one, as long as you don’t conduct substantial administrative or management activities somewhere else.  Your principal residence does not have to be a home that you own.  As long as you meet the other requirements for a home office deduction, you can still utilize the home office deduction for a rented home or apartment.
 
How is the Deduction Calculated?
 
There are two ways to calculate the home office deduction, using either the simplified or traditional methods.
 
1. Under the simplified method, the deduction is based on the square footage ofthe home office at a standard rate prescribed by the IRS. For 2016, the rate is $5 per square foot, up to a maximum office size of 300 square feet, resulting in a maximum possible deduction of $1,500.
 
2. The traditional method of calculating the home office deduction begins with adding up the actual expenses you incurred throughout the year. This includes any money you spent
maintaining the office itself, as well as a proportional share of the entire home's expenses,
including but not limited to:
 
          -  Mortgage interest
          -  Rent
          -  Homeowners' insurance
          -  Property taxes
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Topics: tax services, tax, deductions, home, office, home office

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