Married couples who own two homes often wonder whether they qualify for additional tax exemptions. The best way for couples to make the most of their tax returns is to file with support from an experienced tax consultant. These knowledgeable professionals can assess an individual’s circumstances, advise on exemptions and residency laws, and help them avoid IRS penalties.
It is important for couples to understand tax laws at the federal level and those specific to Michigan.
Married couples who are lucky enough to own two houses may be disappointed to learn that federal law requires them to claim only one primary residence each year when filing jointly. Understanding what counts as a primary residence is vital to maximizing benefits such as exclusions, deductions, and tax credits.
For a married couple filing jointly, residency rules set out by the IRS mandate that a “main home” must be the designated house on file (even for those who split time equally between houses). This primary residence qualifies for specific tax benefits, such as excluding capital gains taxes when selling the home.
The primary residence should be where a couple spends more than six months out of the year. If time is split equally, the couple must choose a residence to designate as their main home.
Michigan law does not exempt married couples from the IRS’s regulations. Many in Michigan wonder how the homestead exemption works for couples, but this law only provides a limited exemption on interest for homestead properties and does not permit joint filers to claim two primary residences (even if they are homesteads).
Those wondering about the tax implications of a second home should be aware of the benefits and challenges that apply to a primary residence, for instance:
Married couples filing jointly for the first time or after purchasing a second home should consult a tax professional to ensure they comply with all IRS regulations and maximize federal and state benefits. These experienced professionals can help couples compile their financial information and may expose them to new benefits and deductions they were unaware of, boosting their returns.
Owning two homes is exciting, but managing the financial technicalities of dual residences carefully to avoid penalties is important.
Levy & Associates offers reliable financial consultancy to Michigan couples. Married couples with two homes should understand what counts as a primary residence and ensure compliance with the IRS’s regulations. Let our knowledgeable team help you explore the benefits offered to primary residences and keep your financial records on track to maximize your tax returns and streamline future real estate investments.
Your financial future is of the utmost importance. To schedule a consultation about your new joint filing or dual residency, you can contact our team online or call 313-447-1704.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.