IRS Simplifies Home-Office Deduction
Even with a 5% increase in income per year, they will not be able to qualify under the 43% debt-to-income test until 2019. That’s a long time to postpone a purchase. Yet consumer research consistently finds that the overwhelming majority of Americans in their 20s and 30s would like to own a home, once they’re able to put together the financial pieces to make it feasible. So what are some of the solutions available to help bridge the gap? The most popular is also the oldest: Growing numbers of relatives are stepping in with gift money to help defray the down payment and closing costs 27% of first-time buyers last year, according to one industry estimate. Down payment gifts do not address the crucial debt-to-income ratio problem, but for young buyers who can get close to the 43% mark for conventional loans ( Fannie Mae and Freddie Mac ) or slightly higher at the more flexible FHA or VA, they can be extremely important. Rules on gifts vary among funding sources, but there are some shared basics: The money cannot be disguised as a gift if it is actually a loan; there needs to be a formal gift letter that spells out the purpose of the gift and the specific transaction for which it is to be used; and the source of the funds and the capacity of the gift giver to provide the money need to be documented. For down-payment help outside the family tree, check out http://www.downpaymentresource.com.
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More quote details and news WTKWY in Your Value Your Change Short position unit that sells tax and other business information and software. Thus, the maximum amount that can be deducted using this method is $1,500. CCH offers this example: Suppose your home office measures 18 feet by 15 feet, for a total of 270 square feet. Multiply that by $5. Your total home-office deduction would be $1,350. This new option “saves time compared with the other home-office tax deduction calculation of figuring related expenses and how they may apply over the course of the year to a home office,” CCH says. The simplified deduction “would replace items that you had to allocate between personal use and business use, such as utilities and property insurance,” Mr.
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