Ok, I bought my first home in sept. I am getting ready for taxes this year and i am confused. I know you can deduct your interest and property taxes but they dont equal more then my standerd deduction. Is there a way to do both? I know after a full year of paying this may work out better but i was hoping to see some benefits of owning a home right away. Is there something else i can look for to help with this?
thanks in advance
2007-01-20 08:43:36 · 4 answers · asked by compnurd9 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
If you bought your home, you probably paid settlement or closing costs in addition to the contract price. These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. If you built your home, you probably paid these costs when you bought the land or settled on your mortgage.
The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. You deduct them in the year you buy your home if you itemize your deductions. You can add certain other settlement or closing costs to the basis of your home. There are some settlement or closing costs that you cannot deduct or add to the basis.
Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home.
2007-01-20 09:51:35 · answer #1 · answered by john_zoltan 1 · 0⤊ 0⤋
Most closing costs WILL be added to the cost or basis of your new house. The only ones that you can deduct, which means they will not be added to basis, are any property tax proration and to the extent they qualify points you paid for your mortgage. Other than that you are limited to interest and property taxes paid in 2006.
You either itemize or use the standard deduction. One or the other.
2007-01-23 17:28:45 · answer #2 · answered by zudmelrose 4 · 0⤊ 0⤋
You get to take the standard deduction or the total of your itemized deductions, whichever is higher, but not both. It's not unusual that, if you buy a house late in the year, the deductions the first year don't benefit you. In future years it almost surely will.
2007-01-20 20:36:34 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
I believe you can deduct escrow expences also.Check with your tax person.
2007-01-20 16:51:17 · answer #4 · answered by (A) 7 · 0⤊ 0⤋