What should I claim on my taxes if I am going to be a first time home buyer later this year? Please help. I am getting a commission check on the 25th of this month and need to know if I should make sure to not get taxed as heavily since I am a 1st time buyer. Thanks.
2007-01-05 10:27:50 · 5 answers · asked by Mel 2 in Business & Finance ➔ Taxes ➔ United States
Points are NOT deductable (with only ONE exception http://www.irs.gov/faqs/faq3-6.html) nice try F guy. Interest is however and how much later this year anyway?
Changing your w4 doesnt make sense to generate extra income for your home. What makes sense is open an online savings account (ala ingdirect) make a weekly contrubition to that and let the interest accumlate on that. The next thing is get a pre approved home loan and STAY AWAY FROM AN ADJUSTABLE RATE MORTGAGE!!!!!!!!!!!!!!!!!!!! You do get a break as a first time buyer with an FHA loan (if you get approved for one of course). The next thing is whatever heavy debt you got now (if any) PAY IT OFF! Another option your 401k (if you have one) you CAN take money out of that and apply it to your home mortgage loan.
2007-01-05 11:32:44 · answer #1 · answered by Anonymous · 0⤊ 0⤋
At the moment, do not change your W-4 unless you know how your taxes for this year will turn out after you purchased the house. Generally, the later you buy the house, less tax benefit that you will receive. Once you buy the house, the person handling the mortgage should be able to give you a rough estimate of houw much interest and property taxes you will pay this year. Once you have those numbers, then do a mock tax return to see what you expect your tax refund to be. After you know that, then you can change your W-4 to compensate for the adjusted taxes.
2007-01-05 18:34:32 · answer #2 · answered by Steve 6 · 1⤊ 0⤋
Depends...if you are buying in the last quarter then you likely won't have enough interest to itemize. If that's the case, no point in worrying about the tax impact. If you are going to buy early in the year then the interest might exceed the standard deduction and you can change your w-4 to lower the withholding. But, don't modify it too much. Better to get more back that first year than to have to pay.
2007-01-05 18:33:20 · answer #3 · answered by digdowndeepnseattle 6 · 1⤊ 0⤋
Wait until you purchase the home, or at least have a contract. Then use the tax and interest amounts from the house and the withholding calculator on the IRS website to determine the best number of withholding allowances to claim. Until you have a good estimate of these amounts, you can't determine how many allowances to claim.
2007-01-05 19:39:19 · answer #4 · answered by STEVEN F 7 · 1⤊ 0⤋
How much later this year? Your deductible home expenses, the mortgage interest, points and any fees you paid to purchase are deductible.
If you are purchasing in Sept, I doubt they would equal your standard deduction, so you shouldn't change the W-4. If in the first half of the year, you might want to take your witholding down a notch.
2007-01-05 18:32:01 · answer #5 · answered by Uncle Pennybags 7 · 1⤊ 0⤋