How much of your income should you spend on mortgage?

The difference between the TVU and BBH is as followed A Transient Vacation Unit (TVU), is a dwelling unit that is rented for less than 30 days at a time. Typically, the owner does not live there, or is not present during the guests' stay. It can be an apartment, condominium, or single family home. Units in a hotel or "condo hotel" are not considered TVUs. A bed and breakfast home is a single-family home in which a room or rooms are renter for less than 30 days at a time. The home's owner, lessee or operator lives in the home and is present during the rental period. -------------------------- In 2018, Mayor Kirk Caldwell is considering a bill to curtail the illegal use of a home as TVU. Under this proposal, there could be a find up to $25,000 a day for the 1st offense, $50000 a day for a 2nd offense, and $100,000 a day for a 3rd offense. Eventually a possible lien against one's property. For B&Bs without registration number the fine can be $10000 and up to $50000 for the 3rd offense. People running the TVU property tax will be 12.90 per $1000 assessed value and for B&B it would be 6.45 per $1000 assessed value. click here for video

Mortgage Interest Deduction As of 1/1/2018, one may deduct mortgage interest on a loan up to $750K. This is a change from the 1 million cap before. This means one would be able to deduct up to $31,630 approximately for a 30yr fixed loan at 4.25% rate. HELOC (Home Equity Line of Credit） may not be deductible unless used to buy or improve investment property. One can also deduct any mortgage late payment fees or prepayment penalty if any in the tax year paid. ---------------- Property Tax Deduction Only up to $10k limit total ----------------- Mortgage Point Deduction For people who get the loan at lower interest rate sometimes they need to pay point to the lender. And this fee is deductible for the tax year you purchased your house. ------------------ Mortgage Insurance Premiums paid by home buyers- also tax deductible for an amount subject to an income cap limit starting at $100,000 ------------------ Home Exemption (property exemption） Hawaii-Honolulu County has the lowest property tax rate in the nation $3.5 per $1000 assessed property value. The exemption amount is deducted from the tax assessed value of your property, and you pay property tax only on the assessed value of your home. Standard Deduction is $80,000 Home Owner 65 yr and older $120,000 Hansen's Disease, Blind, Deaf, or Totally Disabled: $25,000 in addition to any exemption above Disabled Veterans: exempted from all property tax except $300/yr minimum property tax ------------------ MCC (Mortgage Credit Certificate This is a first time home buyer tax credit of 15% of your annual mortgage interest. ------------------ First Time Homebuyer-Penalty Free Retirement Account Withdrawls Possible $10k to $20k for couples from your retirement account penalty-free for the purchase of your first home. (pls ask your CPA for more details) Renewable Energy Credit 30% upfront cost credited dollar for dollar and the unused portion can be rolled over for the subsequent year tax liability. Note: 30% becomes 26% in 2020 and22% credit in its year 2021. Energy Efficiency Improvement : Tax Credit up to life time credit limit of $500 Capital Gain Exclusion Tax Exemption: $250k for single $500k for couple One needs to use the house as one's primary residence for 2 out of 5 years from the time of the sale. NOTE For rental properties converted into your principal residence for 2 out of 5 years owning. The 2008 Housing & Economic Recovery Act effective on Jan 1st 2009. After 2009, you may claim a capital gains exemption only for the time you used the property as your primary residence. Any use before 2009 does not count as nonqualifying use even if you rented it out. Rental Properties converted into primary residence If you move into a property that was purchased via 1031 exchange and start using it as your primary residence then you can claim the capital gain tax exemption only after you held the property five years since the 1031 exchange. This article is for discussion purpose only and by all means not to be used or deemed as legal advise. Please consult with your CPA for professional advise.