Wisdom is not the only benefit of aging, the IRS allows seniors to get some extra tax breaks. Your taxes are high enough; don’t pay more than you need to.
ELIMINATE INCOME TAX ON YOUR HOME SALE
The first deduction is actually for all homeowners, but may benefit older Americans the most as they have had the chance to grow the equity in their homes longer. The IRS allows you to refinance or sell your home and pull cash out without paying income tax! A reverse mortgage is a great way to get that money out, not pay any income tax on it, and not have any mortgage payments for life; it may feel like you are cheating the system, but why not let it work for you. There are a few conditions: You must have lived in your home as a primary residence for 2 out of the last 5 years and you can only take this exemption on taxes once every 2 years.
HIGHER STANDARD DEDUCTION
If you or your spouse is over 65 years old, you get up to an extra $1,500 you can take as a standard deduction (versus itemized deduction). If either one of you is blind the code allows you to take an extra $1,250 on your standard deduction as well.
LOWER PROPERTY TAXES
In 1978 Proposition 13 was passed in California which reduced property tax rates on homes by about 57%. For young people they lost that exemption when they moved, but for those 55 or older they can transfer that lower property tax rate to another home of equal or lesser value in the same county.
HIGHER TAX SHELTER AMOUNTS
If you are over 50 years old, the IRS allows you to contribute $6,000 more than your younger counterparts into a 401k each year while still working. If you are no longer working, the rules allow you to put an extra $1,000 a year into a ROTH IRA or traditional IRA.
HIGHER MEDICAL DEDUCTIONS
On an itemized tax form, your less experienced counterparts in the workforce can only take a medical deduction for amounts spent over 10% of their Adjusted Gross Income (AGI); taxpayers over 65 can take a tax deduction for any amounts spent on medical expenses over only 7.5% of their AGI.
Consult with your tax advisor to see which one of these deductions or credits you qualify for. If you would like help with getting some tax free money out of your home, feel free to call or email Robert Krepps at 877-567-7476 or email@example.com