home buyers tax question?

Question

when you buy your first home and claim the interest on taxes.. how does this work and do you get a % back on your taxes

Answer 1

Sort of. If you have a mortgage for much of the year, the interest you pay will probably kick you over the standard deduction, so you would itemize. Itemizing saves you a percentage of the amount your itemized deductions are over the standard deduction - the % is whatever your tax bracket is.

An example: you are in the 15% tax bracket, file a joint return, and your total itemized deductions including the mortgage interest and real estate taxes total $16,000. Your tax savings for itemizing the deductions will be $795.

Answer 2

The repeat client credit demands which you have owned and lived on your modern-day homestead for 5 of the final 8 years...and is a optimal of $6500. you're able to desire to fulfill earnings standards and have purchase between 11/6/2009 and four/30/2010 (in case you have a signed contract with the help of four/30, you may close as previous due as 6/30/2010).

Answer 3

The first year someone buys a house, they are often shocked to see how little their taxes change. Either they bought the house late in the year (and don't have enough to itemize) or they believed the sale's hype and went, hey I'm in the 15% tax bracket and I pay $2000 a month, so I should pay $3600 less in tax.

1. Their mortgage payment includes principal. Principal isn't deductible.

2. If they are married, they got a $10,700 standard deduction just by breathing. If they can itemize say $12,000 in interest, $4000 in property taxes and $1000 in charity or sales tax, their total itemized deductions beat the standard by $6,300 and at 15%, that's a difference of $945.

3. If the numbers triple, they move into AMT territory and still don't get to reduce their taxes as much as they'd hoped.

Answer 4

Don't listen to Iamthebadboydamit. He is talking about rental property where the interest is deducted before you determine how much profit you make. Most of the other answers are correct. It is deducted on Schedule A along with Medical , Charitable contrubitions, State taxes, personal property taxes and a few other items if you have more than the standard deduction.

Answer 5

ANY interest paid on mortgages is deductable from your income, dollar for dollar. So are real estate taxes. Besidesthe appreiciation of the property, these are the biggest perks to owning real estate.
Your lender should send you a statement displaying exactly what you paid in interest for the year by the end of January. If you dont recieve it, call your lender and request it.
If you have your taxes prepared by a CPA, give them the statement and they will know what to do with it.
If you do your own taxes, there is a line to fill in for interest paid.

Remember this: It is cheaper to pay mortgage interest and real estate tax than it is to pay income tax, plus that money goes to benifit you and not some bogus government program you have no control over.

Answer 6

It doesn't have to be your first home and it's not the "interest on taxes"--it's mortgage interest and state taxes, among other things. You use the long form 1040 which includes a schedule A, where you enter and deduct your home mortgage, property tax, state income taxes, sometimes medical expenses and job expenses, child care expenses, education expenses.

However, with the purchase of your first home, some of the closing costs are also deductible.

Answer 7

If you claim the interest on your taxes, they are pro-rated so that you can claim your interest and taxes from the date of sale and ditto for the seller.
You don't get the interest back unless you are in a tax bracket that permits you to get a return. If not, then the amount is deducted from what you owe.

Answer 8

The amount of money you paid as interest on the taxes will be reported on a specific IRS form. You have to use the full 1040 form to file your taxes (not the 1040A or 1040EZ), and then itemize your deductions, including the interest.

You don't get a % back - it just increases your deductions, which will either reduce how much you owe or increase the refund, depending on the rest of your financial info.