Things To Know When You Are Buying A Home
Buying a home can be a lot of different things. It will most likely be the most money you will spend on any single purchase. It may be the biggest debt you ever incur. And very likely, it could be the best investment you will ever make. Needless to say, it is a major decision to be made.
There are certainly many ways in which buying and owning a home is going to reflect on your personal income taxes. This is why seeking a consultation with H&R Block prior to making that purchase simply makes so much sense. They will make sure you grasp precisely what you are getting involved with.
Congress is constantly revamping the rules in the tax code, points out Lynn Ebel who is a tax attorney. Lynn works with the H&R Block Tax Institute.
Itemizing Deductions Helps Lower Tax Bill
“Itemizing deductions gets the homeowner a better benefit than the standard deduction”, Lynn points out. Homeowners doing so must complete Schedule A of Form 1040.
Regarding your home purchase, here are five things important that you know.
1. Mortgage interest may be deducted.
Homeowners are allowed to deduct the interest on their mortgage. For the year, couples may deduct up to one million filing jointly, and five hundred thousand each filing separately.
2. Real property taxes paid may be deducted
A great positive when you itemize your deductions is that you may claim your real property taxes for the time you hold ownership of a home that particular year.
3. For the purchase of your first home, a retirement savings may be used.
Without incurring the 10% penalty for early withdrawal, $10,000 may be withdrawn from your Roth or traditional IRA.
4. Closing costs are not deductible
5. At tax time, home improvements help
The bottom line is that before proceeding with a major purchase like a home, be sure to check with your tax adviser first.