Tax issues when buying foreclosed homes in Hawaii can be both positive and negative.
If you live in the Aloha State and are looking for a good deal on a new home or rental property, the foreclosure listing might be the place to start your search. However, when you are buying foreclosed Hawaii homes, tax issues need to be considered. Most of the issues won’t be enough to keep you from exploring the option. Buying foreclosed property can mean a substantial savings for you, as well as help you afford more houses for less money.
The tax issues with foreclosed Hawaii homes are both good and bad. Buying a home lowers your overall income tax burden, which is a perk. For example, property taxes and interest paid on the mortgage are both tax deductible. And with a new mortgage, the first few years of payments go more toward interest than principle, so that can equate to a substantial write-off come tax time. Also, if you have to purchase Personal Mortgage Insurance, then that amount is deductible as well.
The tax consequences of buying foreclosed Hawaii homes are pretty much identical compared to buying a home in a traditional manner. You need to research a home thoroughly to ensure that the title doesn’t have liens. If another entity, such as the IRS or a local municipality, has a lien, that burden could be passed to you as the new owner. Lenders will not necessarily disclose these issues or clear them before selling a foreclosed home. It is so important that you do the research.
Due diligence is especially important if the home is being purchased at auction. Tax issues when buying a Hawaii foreclosed home are not always disclosed before the auction, so to avoid unpleasant surprises, you need to know as much as possible about the property. Another downside is that many homes sold at auction are often sold for cash only. If you don’t have a mortgage, you won't enjoy the tax deductions.
Buying a home is usually the most expensive investment a person makes in their lifetime, but there are definite advantages of owning a home. It is a solid investment, even in the most difficult economic times. Buying a Hawaii foreclosed home can be a great way to start a real estate portfolio and as long as you do your research. If you are ready to look at foreclosed Hawaii homes today, go to RealtyNow for free property listings.