There are many tax incentives for owning a home. But how do you designate a primary residence when you own more than one home? Watch this video to find out.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change for your 2018 taxes, but won’t impact your 2017 taxes. Learn more about tax reform here.
Hello, I’m Jill from TurboTax with some interesting information for joint filers who own more than one home. It is no secret that the law provides a number of tax incentives for you and your spouse to purchase a home. However, some of these incentives are only available for the expenses that relate to your primary residence.
The IRS is very clear that taxpayers, including married couples, have only one primary residence—which the agency refers to as the “main home.” Your main home is always the residence where you ordinarily live most of the time. And even if you split your time evenly between two residences, you can’t designate both as your main home. Identifying which of the two residences is your main home is especially important when excluding some of the profit on the sale of your home from tax. This is because both the credit and exclusion are only available for your main home. When you sell your home, the IRS allows joint filers to exclude up to twice as much capital gain as a single filer.
If you cannot easily determine which residence is your main home, there are a number of factors to consider that will help you identify which one it is. Generally, the residence where you receive mail, the address listed on your tax returns and printed on your drivers’ licenses will identify which residence is your main home. In addition, each home’s proximity to your employer and your spouse’s employer, the place where your cars are registered and the place where other family members reside is also indicative of where your main home is.
There are, however, tax deductions the IRS offers that cover the expenses on up to two homes. And as long as one is your main home and you use the other for personal purposes, you can deduct the mortgage interest, home equity loan interest and mortgage insurance premium payments you pay on both. It is important to remember that identifying your main home is only one of many limitations that exist on these tax benefits. Once you determine which of your homes qualifies for a deduction or exclusion, you still may need to satisfy additional eligibility requirements before reporting them on your return.
Remember, when you use TurboTax to file your tax return, we’ll ask you simple questions and recommend the deductions and credits that will get you the biggest tax savings. For more information about income taxes visit TurboTax.com.
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