Is it true that the first couple of years of owning a home you should expect a nice tax return?

Question

I

...NO I have had my home now for a year now. Im just trying to prepar myself for filing for '06

Answer 1

Not really. The big benefit of home ownership is at least all those payments are going toward something you are going to own in the end and not flushing it down the toilet like you do with rent. I have owned for 4 years and there is no big tax whoo-hoo.

Answer 2

For most people, home ownership can be beneficial from an income tax perspective. Not only do you get to deduct the mortgage interest, but you also get to deduct any property taxes paid. The only caveat is that if your mortgage is not very large, the standard deduction may take away most of your bang for the buck as both mortgage interest and property taxes are itemized deductions.

One thing to consider, however, is that if you are paying mortgage interest and property taxes, look for other itemized deductions that might apply:

1. Medical expenses (these have to be pretty big in the aggregate to qualify)
2. Charitable contributions (remember when the Salvation Army came around and you gave all of that stuff, you can claim a deduction for the donation if you can substantiate the donation).
3. Other property taxes (most car registrations are a property tax, but you need to know your State's law)
4. Other taxes you paid (like State Income taxes)


I hope that helps.

Answer 3

Tax savings from the home mortgage deduction are usually not large enough to make a big difference. For example, if you pay $10,000 home mortgage interest and save $500 in taxes, many people would agree that buying a home to save on taxes doesn't make a lot of sense.

The home mortgage interest deduction has to be combined with the other deductions on Schedule A. If the total is more than your standard deduction, then you can use the larger deduction, and reduce your taxes or get a bigger refund.

Here is a copy of Schedule A:

http://www.irs.gov/pub/irs-pdf/f1040sab.pdf

Answer 4

No, I really don't think so. What does buying a house have to do with getting a tax break. The City wants you to pay your property takes one year in advance upon the purchase of your house. Some utilities companies will give you a break on you bill the first two months. Mmmm.... I have to check into that tax break thing.

Answer 5

Not really true. In some cases you may not, but for a majority of the cases you will get a tax relief. So are you planning on buying a home because you want to or because you want to get a "nice tax return"?

Answer 6

Yes, very true since especially during the first several years your mortgage payment will be mostly tax deductible interest.