2007-06-23 07:52:29 · 7 answers · asked by cheetarareturns 1 in Business & Finance ➔ Taxes ➔ United States
No.
You can deduct mortgage interest and real estate taxes on Sch A.
2007-06-23 07:59:41 · answer #1 · answered by Mark S 5 · 0⤊ 0⤋
No. There would be no reason to deduct an asset from your yearly income. All that may be deducted is the mortgage interest you pay per year and the property taxes you pay per year.
Even when you want to sell the house, say in a few years, the down payment has no effect on your taxes. The cost basis of your home is what your purchase price for the home was. And the cost basis may rise if you do improvements to your home, such as new carpet, etc. The cost basis is subtracted from the price you sell your house for to determine your capital gain. If you owned the house for longer than a year it is a long term capital gain, which is taxed at a lower rate than a short term gain. If you lived in the house you sold you have a $250,000 if single and $500,000 if married deduction in capital gains.
So, the down payment has absolutely no tax consequences whatsoever.
As to the post below about depreciation:
You cannot depreciate a home you live in unless you rent out a room to someone or use it for a home business. Even if you were in this case, the amount of the down payment is not used in any way in calculating your depreciation deduction.
2007-06-23 08:07:55 · answer #2 · answered by Erik G 2 · 0⤊ 0⤋
The money you pay toward purchasing the house is an asset to you, it creates equity for you. So, it is not tax-deductible, nor is it going to be taxed to you.
When you purchase a house, the costs of obtaining the financing, called "points" or "discount points" or "loan origination fee" are going to be deductible. These fees will appear on the HUD statement that you will receive at closing.
You may also have real estate taxes that you paid at closing, and this will be deductible as well. These taxes may or may not appear on the tax document the bank sends you.
Of course, the interest part of the mortgage payments you make are deductible. The principal part of the mortgage isn't going to be deductible.
So keep that HUD document to use when you file your taxes, along with the Form 1098 you will from the lender.
2007-06-23 08:11:29 · answer #3 · answered by ninasgramma 7 · 1⤊ 0⤋
The other answers are correct in that you cannot deduct the down payment -- but there is a long round-about way to deduct at least part of it.
They are correct that the normal deduction is limited to mortgage interest -- but you can also depreciate the home. Normal depreciation is usually limited to the structures, not the dirt. If you intend to keep this home until death, you might consider depreciating it. If you ever intend to sell, however, and you sell for more than you are now paying, you will have to add the depreciation you take now back to the profits you will have to pay taxes on later.
This reclaimed depreciation would be taxable even if other proceeds you get from the sale are not taxable. I invest in real estate and never claim depreciation because either I would end up paying or my kids would end up paying. Still, it is one way you could deduct.
Regards and luck
2007-06-23 19:42:33 · answer #4 · answered by Poetic 3 · 0⤊ 2⤋
No. The down payment is not a tax deduction. If you itemize your deductions (rather than take the standard deduction) the property tax and the mortgage interest are deductible.
2007-06-23 09:22:52 · answer #5 · answered by skipper 7 · 0⤊ 0⤋
Nope. You can deduct mortgage interest and real estate taxes if you itemize, but not the purchase price of the house. And the down payment is part of the purchase price of the house.
2007-06-23 09:40:27 · answer #6 · answered by Judy 7 · 0⤊ 0⤋
Of course not! That's just part of the purchase price.
And PLEASE ignore "Poetic" below! You CANNOT depreciate a personal residence! If you convert it to a rental property, sure, but NOT as your personal residence!
2007-06-23 08:02:58 · answer #7 · answered by Bostonian In MO 7 · 0⤊ 0⤋