Bought house; tax breaks?

Question

I bought a house in late September. The company I bought it from were tax exempt. I filed for homestead exemption. Will I get anything back on my income tax?

Thanks!!

Answer 1

It depends on many factors

Filing Status
Points Paid
Interest Paid

As you bought so late in the year, there may be a minimal effect (if any) on your 2007 return. You should see a difference in your 2008 return.

Note: Buying a house is a great idea but it is not the HUGE tax windfall that some people expect.

Answer 2

Buying the house that late in the year, it's fairly unlikely that you'll get any tax break for 2007 unless you were already itemizing, then you might get a little.

In later years, having the house all year will probably allow you to itemize for much of the period of the mortgage, since you would probably have a lot of interest. The savings aren't likely to be thousands of dollars though, usually more like a few hundred unless it's a very expensive house.

Answer 3

Whether you get anything back on your taxes for 2007 will depend on a number of factors. Including how much you've paid in interest, points, and real estate taxes in 2007. sometimes you find that it is still better to claim the standard deduction if you purchase a house later in the year.

But in general the tax breaks are interest/points, real estate taxes, and for a single person, you can exclude up to $250,000 in capital gains from the sale of the house if you've lived in it for at least two years (there are some conditions to the rule, and variances, but that's the basics).

Don't believe your realtor when they told you everything on the closing statement was immediately deductible.