Tax Tips For The First Time Home Buyer
First, let me preface this by admitting I’m not a layer or an accountant… but I’ve learned a few things over the years that may help others as we head into that season when our dirty Uncle Sam digs his grubby paws into our pockets. All the same, make sure you verify anything you read with your tax professional.
For most non home-owners, taking the “standard deduction” on their taxes is the path of least resistance. It is easy, and usually larger than if you were to itemize (because there likely isn’t much to itemize). Once you own a home, things get real! You can deduct your mortgage interest payments. This deduction (combined with your other deductions like car registration etc.) will almost always exceed the “standard deduction” putting more money in your pocket. In 2014, the standard deduction is $6,200 for taxpayers who are single or married and filing separately, $9,100 for head of household filers and $12,400 for those married, filing jointly.
The more money you owe, the larger your interest liability will be; thus a larger deduction! We aren’t advocating borrowing as much as you can, but it is nice to know there is at least some advantage to paying all that interest. Of course, like everything in life there are some restrictions. For example: your mortgage interest is only deductible up to a balance of $1 million, or $500,000 if filing as single or separately… but if you have a mortgage that large you likely have dedicated tax people informing you. You can also deduct your property taxes and any points paid at the closing table to lower your mortgage rate. The interest on home equity loans and lines of credit are also deductible.
Your state taxes are deductible on your federal return. Any charitable contributions you made this past year are also deductible, provided you have proper documentation. MT Real Estate regularly has charitable causes going, if you would like to participate and possibly save something on your taxes at the same time… that’s a win-win! There are other specialized deductions that may fit your situation. For example, if you have student loans, the interest on them can be deducted, up to $2,500. Or you may qualify for an employee business expense deduction if you had to temporarily commute to another city for work. There are certain discounts for military personnel and for equipment related to your profession too. For details about what additional deductions may apply to you, you should definitely consult a tax professional. Just like real estate… having the right team pays off!
Of course there will always be exceptions to the rule, (if you buy a relatively inexpensive condo), itemizing may not be beneficial for you. Overall, it is almost always a benefit to the home owner to itemize on their taxes. So call MT Real Estate: 480-426-9220, email firstname.lastname@example.org, or visit www.BigCheckBroker.com and let us help get you into the home of your dreams… and maybe you’ll save a couple bucks on your taxes too!