Realtor Magazine recently had a feature article, “23 Federal Laws that Apply to Real Estate Sales”. There were some interesting laws relating to loans which included the Mortgage Reform and Anti-Predatory Lending Act. This act governs lender compensation to curb abusive loans by restricting the way mortgage professionals are paid.
There is also the Fair Credit Reporting Act that permits consumers to receive one free copy of their credit report a year by contacting a credit reporting agency. It is a good idea to take a look at your credit report to see if there are any items that are incorrect that could affect your credit score.
With regards to income tax, there is the capital gains exclusion on the sale of your principle residence. Basically, if you sell your primary home you can exclude up to $250,000 ($500,000 for married couples filing jointly) of the capital gains.
You must have lived in your home for 2 of the 5 years before the date of sale. I remember when I sold my first primary home that I purchased for $330,000 and sold for $510,000. I lived in it for 2 years prior to selling it and did not have to pay for any capital gains taxes.
There is also the mortgage interest deduction that allows homeowners to reduce their federally taxable income by the amount of interest paid on their home loan. There is a limit on the loan amounts up to $1 million or $100,000 in equity for home equity loans.
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