Taxes. I just bought a house in June of 06. I am single, no kids and earn $40 000 per yr. and claim 1?

Question

i have no clue how taxes work but can I assume that i will get a significant tax break because of my homeownership status (i usually got about 1100 back when I was renting.)

Answer 1

You may or may not get any break for owning your home. You haven't provided enough information to say. You can deduct your mortgage interest and property taxes if you itemize your deductions. If your total itemized deductions exceed your standard deduction ($5,350 for 2007) then you will get a bit of a break for the amount that they exceed the standard deduction.

For example, if your mortgage interest and property taxes add up to $6,350 and you had no other itemized deductions, you'd get a $1,000 reduction in your taxable income over and above the standard deduction. You're probably in a 15% tax bracket, so that would get you a $150 tax break. Not a windfall, but better than nothing.

If you're getting back that much when you file, you should kick your withholding allowances up by 1. That's really too big of an interest free loan to the government. It's doubtful that you'd get enough of a break on your mortgage interest and taxes to go any higher than that unless you're willing to owe a few dollars at filing time. If you bumped it up to 2, you'd probably be looking at a $50 to $100 bill at tax time but you'd also have a bit over $20 per week extra in each paycheck as well. In the end, that's your call.

BTW, at least one other poster said you can deduct home improvements. That is NOT true. Keep records of that for when you sell, however, as it will reduce your gain when you sell and if any tax should be due (usually there isn't, but that's another issue) it would reduce that tax.

Answer 2

Bostonian Answers the interest and property tax portion very well. But, he did not mention that since by breaking that 5300 barrier with the mortgage and property taxes that it may now allow you to take other deductions that you would not have been able to because they where not above the 5300 by themselves. Such as your income or sales taxes, taxes on your personal property, tax preparation fees, medical expenses over 7.5% of your gross pay, and dont forget charitable deductions. These things can really start to add up just to let you know.

Answer 3

Bostonianinmo explains the itemized deduction for mortgage interest and property taxes well.

The "home improvements" the first poster was probably talking about are items that qualify for a home energy credit - for example, new windows, doors or furnace that meet certain requirements. Other than that, home improvements can't be deducted.

Answer 4

Don't know if you use tax software to do your taxes or not. Generally, you get a deduction on your mortgage interest you pay. Seek help through financial websites about personal finances. They give you a general idea about stuff you need to know.

Answer 5

remember on what you call mushy, different view at as distinctive issues. i think of you may desire to positioned a roof over your infants head, feed them and fabric them with that income. inspite of the undeniable fact that it does no longer be an exceedingly outstanding massive abode, does no longer be fancy dinners all of the time or going out to consume someplace, and does no longer be all call form clothing all of the time. you have gotten to bypass devoid of cable, and high priced autos, high priced jewel and lush fixtures. yet that does no longer mean your existence wont be mushy, countless those fabric issues would not equivalent convenience. To me mushy is understanding i will pay my expenses whilst they arrive, purchase nutrition for my family individuals and characteristic a secure heat abode to stay in. i might desire to care much less approximately all those different "comforts". they're outstanding to have yet no longer mandatory. we're not making a ton, around fifty 5,000 a 300 and sixty 5 days, we've a complete of two teenagers (one lives together with her mom) and we are mushy. we don't get each thing we would like, yet we get each thing we choose. and that i understand adequate to be thankful for that still. like countless different posting reported too. It incredibly relies upon on the place you reside, I stay in a notably extreme fee residing area of the country.