filing taxes?

Question

im a 1st time home owner!!well,a condo owner.i understand i will get a decent tax break every year.and i understand home improvements are tax deductable,what does this mean?i get the taxes i spend on these items back.if mortgage is in mine and my girlfriends name,do we split the tax benifit,can we BOTH claim the home improvemen\ts

Answer 1

You have been given a variety of wrong information.

You might or might not get a tax break every year, or any year. If your total itemized deductions including the mortgage interest and real estate taxes you pay that year are more than your standard deduction, you can itemize and will save a percentage of the excess on your taxes - the percentage depends on your tax bracket. If you are single, your standard deduction this year is $5350. A deduction is subtracted from your income before calculating your tax, it doesn't get subtracted right from your tax. So if for example your total itemized deductions are $10,000 and you are in a 15% tax bracket, your tax savings from being able to itemize would be (10,000 - 5350) x .15, or $697.50.

Home improvements are not tax deductible. When you go to sell the condo, they can be added to the price you paid to calculate your profit. Since the first $250K profit is excluded from tax anyway if you own and live in the condo for at least two years of the five right before the sale, this isn't likely to make any difference if you meet the two year rule, since you probably wouldn't owe tax on the sale anyway. When you sell, you can split the total cost, original plus improvements plus selling expenses like realtor's commissions, between you and your girlfriend - you can't both claim the same expenses - what one of you claims, the other can't. And by the way, that's IMPROVEMENTS, not repairs - repairs don't affect your taxes in any way or save you any taxes at any time.

Since you and your girlfriend are both on the mortgage, you can split the taxes and insurance and each of you claim part of it. The person paying them should get the tax benefit. And no, you can't BOTH claim the entire amount - you could split it and each claim half, for example.

Answer 2

1) Home improvements are not tax deductible so neither of you can claim them.

2) The interest on the mortgage and the property taxes are deductible if you itemize. You would each deduct the portion of the total that you pay. One of you should pay all of the mortgage and the other should be other non-deductible items around the house.

Answer 3

Mortgage interest is only deductible if you are legally obligated to pay it and you actually pay it. So unless the mortgage is in you and your girlfriends name only the person who actually qualified for the mortgage can claim the interest if they pay it and not the girlfriend.

Hope this makes sense.

Answer 4

home improvements only come in when you sell. say yu bought the place for $200,000 and sell it for $300,000. you would have to pay capital gains tax on $100.000...but you can reduce that by the amount of your home improvements.

Answer 5

Talk to a CPA.