CHAPTER 27

Your Residence

After Taxes, Your Home May Be Your Biggest Expense–It May Also Be a Great Tax Deduction

As a general principle, the tax code allows you to take a deduction for expenses that you incur in an effort to create income. The allowance of these deductions encourages people to invest in things that increase their income—increasing taxes as a result. That is why most expenses related to a business are allowed as deductions, when those same items are not deductible when used for personal reasons.

The opposite of this principle is true as well. In most cases the tax code does not allow you to take a deduction for personal expenses—for things that are intended for your personal benefit and not for the purpose of generating income. ...

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