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Homeowners, Renters and Taxes

There's a lot more to being a landlord than cashing a rent check. Renae Merle's report in the Real Estate section this weekend lays out some of the tax breaks that can make the investment work. Deductions available to landlords include mortgage interest, property taxes, insurance and depreciation--an on-paper-only expense that reflects the diminishing value of a building as it deteriorates over time. And actively involved landlords who don't farm all the work out to someone else can deduct as much as $25,000 of losses against their non-rental income.

Homeowners, of course, have their own well-known tax breaks. Mortgage interest and property taxes are deductible. And, after selling their main home, married couples can reap as much as $500,000 in capital gain without owing a penny in tax. (The limit is $250,000 for singles.)

Is the system stacked too much in favor of homeowners? Landlords? Do renters get a fair shake? What do you think?

By Elizabeth Razzi  |  February 27, 2009; 2:09 PM ET
Categories:  Taxes  
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Homeownership %age in US had been at a stable low 60's number. Over the last few years of public policy of low interest loans and relaxation of income verification increased the percentage to high 60's and now it is trending back to normal. Rental property owners play an important role of providing housing. New or accidental landlords should really look at making sure that they track their income and expenses and take full advantage of tax benefits available to them. By taking advantage of these tax benefits they can boost their return by 20%.

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Posted by: michellefisherm | February 28, 2009 4:18 PM | Report abuse

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