tax question?

Question

i purchased a new home last year. when i file, do i get all of the interest back that i paid in?

Answer 1

No, but you can take it as an itemized deduction. If your itemized deductions are higher than your standard deduction, then you would use the itemized total. The itemized or standard deduction reduces your taxable income that your tax is calculated on.

An example: your itemized deductions add up to $8000, and you are single. Your standard deduction would be $5150, so by itemizing your taxable income is (8000 - 5150) or $2850 lower than if you hadn't itemized. If you are in a 15% bracket, you'd actually save 15% of that $2850, or $427.50.

Answer 2

No, you don't get the interest bank. Banks are stingy.

You do get to claim the interest on schedual A.

You're going to get a 1098 form in the mail with your total interest paid for the year and your property taxes. Both are deductible, as are any of the points you paid on the loan.

The problem is that your expenses have to be higher than the standard deduction (this year for singles it's $5150 and for marrieds $13,300). While you're at it, you can add all of the following to your home interest to see if you're over the top:

medical bills
medical insurance
prescriptions
(total medical has to be pretty high to count)

sales tax
value-added tax
state income tax

interest on your first home
interest on your second home
interest on a motor home if it counts as a "home"

charitable contributions

losses from burglaries, fires, floods, hurricanes, etc.

employee expenses like uniforms and dues
accounting fees and tax fees

If you bought your home late enough in the year, and you're filing a joint return, it's possible that you won't be able to claim it. You really have to fill out the schedual A to make sure.

Answer 3

Your bank will send you a 1099 form for the interest amount. Including that interest amount, if you have other deductions on Schedule A Form 1040, and they total more than the standard deduction for you, then all that decreases the income you will be taxed on. It is not truly "getting that interest back" it is just a possible way of not having to pay tax on the money you earned and had to use to pay the interest.

Answer 4

No. But if you itemize your deductions you can deduct the interest paid, points paid and property taxes paid. This will reduce your tax somewhat, but you do not get it all back.