After completing this unit, you should be able to: Determine whether a home is considered a principal residence, a residence (not principal), or a nonresidence for tax purposes, compute the taxable gain on the sale of a residence and explain the requirements for excluding the gain on the sale, determine the amount of allowable interest expense deductions on loans secured by a residence,. | Chapter 14 Tax Consequences of Home Ownership Learning Objectives Determine whether a home is considered a principal residence, a residence (not principal), or a nonresidence for tax purposes. Compute the taxable gain on the sale of a residence and explain the requirements for excluding the gain on the sale. Determine the amount of allowable interest expense deductions on loans secured by a residence Discuss the deductibility of real property taxes and describe the first-time home buyer credit Explain the tax issues and consequences associated with rental use of the home, including determining the deductibility of residential rental real estate losses Describe the requirements necessary to qualify for home office deductions and compute the deduction limitations on home office deductions Tax Status of Dwelling Unit Dwelling unit includes Home Condominium Mobile boat Other similar property Dwelling unit may be used for Solely personal use Mixture of personal use and rental use Solely . | Chapter 14 Tax Consequences of Home Ownership Learning Objectives Determine whether a home is considered a principal residence, a residence (not principal), or a nonresidence for tax purposes. Compute the taxable gain on the sale of a residence and explain the requirements for excluding the gain on the sale. Determine the amount of allowable interest expense deductions on loans secured by a residence Discuss the deductibility of real property taxes and describe the first-time home buyer credit Explain the tax issues and consequences associated with rental use of the home, including determining the deductibility of residential rental real estate losses Describe the requirements necessary to qualify for home office deductions and compute the deduction limitations on home office deductions Tax Status of Dwelling Unit Dwelling unit includes Home Condominium Mobile boat Other similar property Dwelling unit may be used for Solely personal use Mixture of personal use and rental use Solely rental use Tax Status of Dwelling Unit Whether dwelling unit is residence or nonresidence for tax purposes depends on how unit is used Dwelling unit is residence if Personal use days is more than the greater of 14 days or 10 percent of the number of rental days during the year Otherwise it is a nonresidence for tax purposes Tax Status of Dwelling Unit Personal use days include Days taxpayer (owner) or other owner stays in home Days a relative of owner stays in home even if relative pays fair market value (unless home is relative’s principal residence) Days a nonowner stays in home under vacation hoe exchange or swap Days a taxpayer rents out property for less than fmv Tax Status of Dwelling Unit Rental days include Days when taxpayer rents property at fmv Days spent repairing or maintaining home for rental use Days home is available for rent but not rented out are not personal or rental days Tax Status of Dwelling Unit Residence is “principal” residence Subjective determination Taxpayer
