What is a write off for house taxes. I am a 1st time buyer and this will be my 1st year paying taxes?

Question

My accountant says to hold on to my receipts for home improvements, and basically anything that I spend money on my home for tax time. Does this mean that I get that money back at tax time? I am brand new to this so any info would help.

Answer 1

If this is your primary residence, then you can deduct the mortgage interest paid and real estate taxes. Also, if you just bough the house and paid discount points, they are also deductible. Those expenses are listed on Schedule A -- Itemized deductions, along with your state or local income taxes paid. If the sum of those expenses is greater than standard deduction (depending on your filing status) then you will save some money.
I don't know why the accountant asked for home improvement receipts as those are not tax deductible. Unless you sell your house in less than 2 years and make profit on it.

Answer 2

Hang onto receipts for improvements - if you sell the house and owe taxes on the sale, the amounts paid for improvements can be added to your basis, so you'll pay less tax on the sale. But no, they don't have anything to do with your tax returns until you sell the house, and then only matter if you owe tax on the sale.

Mortgage interest and real estate taxes can be taken as itemized deductions in the year they're paid. This reduces your taxes if your total itemized deductions is more than the standard deduction for your filing status. You don't get the money back dollar for dollar, but might get a percentage of it depending on your tax bracket.

Answer 3

One thing at a time:

The US Tax Code has a lot of things in there to encourge home ownership, from the time you buy and finance it to the time you sell.

From now on, hold onto your property tax bills and look for the Form 1098 that your mortgage company will issue. You can itemize your local property tax paid and the mortgage interest paid on your primary residence onto Schedule A. Those two alone, in many cases, exceed the standard deduction.

For this first year of ownership, have the HUD-1 form you were given at closing available. That has a lot of info regarding prorated prepaid property taxes and any points you had paid. Your accountant will know what to look for on that form.

Re Home Improvements: you hold onto receipts in order to adjust you home value basis, which can become an issue if/when you sell and you have to determine if the profits of that sale are taxable. Home improvements themselves are not tax deductible, which also answers that other question: the money you plow into improvements is never refunded to you at tax time.

Good luck.

Answer 4

each month when you make your payment a certain % goes toward you principle (the balance due on the loan) and a certain % goes toward interest. the % interest is usually higher than what actually goes toward paying off your loan unfortunately. you should receive a 1090 form from whoever holds your loan at the end of the year telling how much principle is paid and how much interest you paid. the intrest is deductable (decreases your taxable income amount). i.e. the less you make the more you get back.

Answer 5

that depends on your income vs your deductions. Mortgage intrest is always a great deduction, however the refund will depend on your income and how much tax has been taken from your paycheck.