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Personal Residence FAQ's


Under the tax code, a main home or personal residence is treated differently than a residential rental real estate property

The main differences have to do with what expenses are deductible and the tax impilications when the property is sold.


The only possible expense/deductions allowed, assuming the taxpayer itemizes deductions on Schedule A, Form 1040 are:

1-Mortgage Interest


3-Mortgage Insurance Premiums

4-Real Estate Taxes

For items 1,2,and 3, the lender will provide you with a Form 1098 Mortgage Interest, which is also provided to the IRS. If real estate taxes are paid from an escrow account, these will also be included. If real estaate taxes are paid by the tazpayer separately, they will not be on Form 1098 Mortgagr Interest Statement.

NOTE: Real estate taxes are deductible "in the year they are actually paid". Taxpayers who pay their owm real estate taxes will need to keep a record each year for what was actually paid.

NOTE: Closing/settlement costs on the purchase are added to the initial purchase price and deducted from the sale price when the property is sold.

Capital expenditures for major additions, improvements, and renovations are added to the initial cost of the home. Taxpayers should keep a record of each of these with the date, description, and total amount.

Other ongoing expenditures are NOT deductible, for example:

1-Homeowner's Insurance

2-Maintenance & Repairs




and so on.

NOTE: For a residential rental property, ALL expenses associated with operating and maintaining the rental activity are deductible, including depreciation.. Capital expenditures are treated as described above, as are real estate taxes, and closing/settlement costs.


For a main home or personal residence, if the taxpayer meets the various requirements for exclusion of gain, up to $250,000 ($500,000 married file jointly) is excluded from taxation.

Loss on the sale of a main home or personal home, (including a second or vacation home), is never deductible.


Gain on the sale of a second or vacation home is a taxable capital gain.

For residential rental real estate, gain from a sale is taxable and loss on a sale is deductible.


For all real estate properties, you will need to keep a record of:

1-The HUD purchase and sale closing statements

2-All expenditures---date, description, and total amounts.

CALL NOW 561-746-1926 or 561-339-8102 if you have any questions or concenrs or would like to schedule a FREE, Confidential, N0-Obligation Tax-Saving Consultation.