Home Ownership
The most frequently asked tax questions related to Home Ownership
Can I avoid paying Private Mortgage Insurance (PMI)?
Asked Tuesday, October 24, 2000 by an anonymous userCPA Answer:
Lenders usually require PMI if the mortgage loan is more than 80% of the home's purchase price. If you do not have the standard 20% down payment, there are ways to avoid the PMI. Speak to your local CPA about the 80-10-10 financing plan and other strategies to avoid the PMI.
What is a Reverse Mortgage ?
Asked Tuesday, October 24, 2000 by an anonymous userCPA Answer:
A reverse mortgage is used to convert home equity into cash. Payments take the form of a lump sum , line of credit or monthly payments over a specified number of years or over the life of the borrower. The amount being drawn is from the borrower's principal and considered tax-free and Benefits. Generally, the homeowner borrower must be age 65 or older and the residence must be close to being totally paid off.
What is a " no income check" loan ?
Asked Monday, October 23, 2000 by an anonymous userCPA Answer:
When applying for this kind of a loan, your income will not be checked, but your assets, employment and credit are checked. Generally, 25% of the equity must be paid as a down payment and rates and points are higher than income-checked loans.
What is a five year Adjustable, with a 30 year term mortgage ?
Asked Monday, October 23, 2000 by an anonymous userCPA Answer:
The loan's rate is fixed for the first five years. After that, it becomes an adjustable rate mortgage, with a 30 year term.
Other variations include fixed periods of seven or 10 years before adjusting annually.
Generally, this is attractive for borrowers who expect to be in the house for a short period of time.
Other variations include fixed periods of seven or 10 years before adjusting annually.
Generally, this is attractive for borrowers who expect to be in the house for a short period of time.
What is a Working Mortgage ?
Asked Monday, October 23, 2000 by an anonymous userCPA Answer:
This mortgage is for borrowers who need 100% financing. Generally, it is for a 30 year fixed mortgage. No money down is required, but the monthly mortage payment must be deducted directly from the borrower's paycheck.
What is a Piggyback Mortgage ?
Asked Monday, October 23, 2000 by an anonymous userCPA Answer:
A borrower takes a conventional 30-year loan for 80% of the loan amount. A second mortgage for 10% of the loan amount is taken simultaneously at a slightly higher rate. The idea is for the borrower to quickly pay off the second loan and leave the borrower with a fixed loan with no Purchase Mortgage Insurance (PMI).
I was denied a loan , where do I get a copy of my credit report ?
Asked Saturday, October 14, 2000 by an anonymous userCPA Answer:
According to Federal law, you are entitled to a free copy of your credit report within 60 days of being denied credit. Ask the lender which credit bureau the lender dealt with in order to get your free copy. You may also contact one of the three major credit bureaus. Their names are Tran Union Corp, PO Box 390, Springfield PA 19064-0390, 1-800-916-8800. Experian (formally TRW) PO Box
9530, Allen TX 75013-2104. Equifax PO Box 105873, Atlanta GA 30348 1-800-685-1111. Speak to your local CPA if you need assistance obtaining a copy of your credit report.
Divorce settlement - Cost basis of Residence
Asked Thursday, October 05, 2000 by an anonymous userCPA Answer:
The transfer of the house to you that was "incident to a divorce" is treated as a tax-free exchange and not taxable.
The cost basis to you would be the original cost, plus improvements made over the years, not the possible appreciated fair market value as of the date of the divorce.
The current law allows an unmarried individual to exclude up to $250,000 ($500,000 married filing jointly)of gain realized on the sale of a residence.
The cost basis to you would be the original cost, plus improvements made over the years, not the possible appreciated fair market value as of the date of the divorce.
The current law allows an unmarried individual to exclude up to $250,000 ($500,000 married filing jointly)of gain realized on the sale of a residence.
Is a House Foreclosure a taxable event?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief.
This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief.
This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).