for the example purpose, say i want to purchase a home worth of 400000. Assume I get a loan ( 6% int rate for 10 years) for this amount. I get the standard duction of 10000 every year when I pay income tax. In addition to the 10000, how much more can I deduct because of the home purchase ?....what is the maximum amount allowed by IRS to deduct because of the home purchase ?
2007-12-07 04:44:35 · 6 answers · asked by i-love-god 1 in Business & Finance ➔ Taxes ➔ United States
I think there is one major thing you're over-looking.
The started deduction for married filing jointly is $10,700.
If you choose to deduct your mortgage interest, you'll have to itemize your deductions and not take the $10,700 standard deduction.
You need to go through a Schedule A and total up all of the deductions you can take. If it doesn't come to more than $10,700, you're better off just sticking with the standard deduction.
2007-12-07 04:56:20 · answer #1 · answered by Stacia Z 3 · 0⤊ 0⤋
You could take the mortgage interest and real estate taxes as itemized deductions on your tax return, and that would most likely bring your itemized deductions above the standard. You don't get to take both though - if you itemize, then you do NOT also get the standard deduction.
The maximum is based on the value of the mortgage, not the amount of deductions it generaltes, and with a $400K home you are well within the limit.
2007-12-07 18:41:05 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
You cannot take the standard deduction if you want to deduct home mortgage interest (and other allowable itemized deductions). You must choose one or the other.
As for the maximum amount of mortgage interest you can deduct, I don't know, but at some point, you may be subject to the Alternative Minimum Tax (AMT) if you have excess deductions. Contact a qualified tax preparer.
2007-12-07 04:55:22 · answer #3 · answered by curtisports2 7 · 1⤊ 0⤋
You can't claim both the standard deduction and itemize deductions - its one or the other. The interest you pay on your home mortgage will be a deductible expense.
2007-12-07 09:42:35 · answer #4 · answered by Anonymous · 0⤊ 0⤋
max is based on maximum of 1 million orig purchase price I think - in the first full year of mtg payments, you'll be able to take 12 months mtg INTEREST plus Real estate taxes paid, plus state and local income taxes paid from your paycheck - that's typically the bulk of what most people can claim
2007-12-07 04:49:25 · answer #5 · answered by Anonymous · 0⤊ 0⤋
you are allowed to deduct the interest payments that you made on your loan for the entire year and on the year you close you can deduct closing costs also
2007-12-07 04:48:04 · answer #6 · answered by Fabio G 3 · 1⤊ 2⤋