Tax quirk could make your home more attractive to buyers
If you're selling a home, here's how to make it more attractive to potential buyers: Throw in some cash and an income tax deduction.
The Internal Revenue Service allows the seller to pay points -- that's a fee some homeowners pay to lower their mortgage rates -- on the buyer’s behalf. Then the buyer gets to deduct the points as mortgage interest.
Learn more about how this process works in my Interest.com article, Tax quirk could make your home more attractive to buyers.
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Home buyers can fully deduct points in the year they pay them if the relevant mortgage is for a primary residence and if buyer's don’t borrows money to pay points from a lender or mortgage broker. When the buyer sells the home, the seller-paid points must be subtracted from the home’s cost. The buyer could thus end up paying more in capital gains tax down the road.