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Old 09-27-2010, 09:20 AM
 
153 posts, read 573,366 times
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I am looking to purchase my first home and I am trying to do as much research as possible first. Are there significant tax breaks for owning a home? What can I claim on my taxes and what should I expect my returns to be like? Right now I rent an apartment so I have never had to pay property taxes before. Do I get to claim any of the property tax on my federal or state returns? Any help would be greatly appreciated. Thank You!
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Old 09-27-2010, 10:27 AM
 
Location: West Orange, NJ
12,545 posts, read 18,432,480 times
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despite what you think, you are paying property taxes right now as a renter. your landlord isn't kind enough to rent you a place without making you cover his/her costs.

anyways, standard deduction for a single i believe is $5,500 (maybe more). Owning a home allows you to deduce all interest paid, as well as your property taxes. In the first year, you also get to deduct your closing costs. for most people, this will typically push you past the standard deduction. how much you deduct depends on how much your mortgage is. the beginning of a mortgage term is typically going to be 90-95% of your payment going to interest, so the deduction starts off big, and will slowly decrease as you pay off more of your balance, and less of your payment is interest over time.
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Old 09-27-2010, 07:47 PM
 
Location: Northern NJ
964 posts, read 2,646,160 times
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Quote:
Originally Posted by t_woww View Post
I am looking to purchase my first home and I am trying to do as much research as possible first. Are there significant tax breaks for owning a home? What can I claim on my taxes and what should I expect my returns to be like? Right now I rent an apartment so I have never had to pay property taxes before. Do I get to claim any of the property tax on my federal or state returns? Any help would be greatly appreciated. Thank You!

You should speak with your accountant. However, yes, there are many tax breaks to owning a home. Mortgage interest is deductible -- taking for granted that you will be obtaining a mortgage to purchase your home. Yes, property taxes are deductible, but that's something you need to speak with your accountant about.
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Old 09-28-2010, 06:08 AM
 
Location: Redneckville, NJ
6,777 posts, read 10,173,498 times
Reputation: 3320
Quote:
Originally Posted by bradykp View Post
despite what you think, you are paying property taxes right now as a renter. your landlord isn't kind enough to rent you a place without making you cover his/her costs.

anyways, standard deduction for a single i believe is $5,500 (maybe more). Owning a home allows you to deduce all interest paid, as well as your property taxes. In the first year, you also get to deduct your closing costs. for most people, this will typically push you past the standard deduction. how much you deduct depends on how much your mortgage is. the beginning of a mortgage term is typically going to be 90-95% of your payment going to interest, so the deduction starts off big, and will slowly decrease as you pay off more of your balance, and less of your payment is interest over time.
Closing costs are not deductible. Only mortgage rate points, mortgage interest and real estate taxes paid at the closing are.
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Old 09-28-2010, 09:43 AM
 
Location: Epping,NH
2,104 posts, read 5,723,412 times
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Don't forget any energy efficient improvements can give breaks but they may expire this year.
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Old 09-28-2010, 09:45 AM
 
Location: West Orange, NJ
12,545 posts, read 18,432,480 times
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Quote:
Originally Posted by Calico696 View Post
Closing costs are not deductible. Only mortgage rate points, mortgage interest and real estate taxes paid at the closing are.
right, and those are part of closing costs. sorry, didn't mean to imply all closing costs were deductible.
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Old 09-28-2010, 12:08 PM
 
14,780 posts, read 35,988,311 times
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For most people it generally makes the difference between taking the standard deduction and being able to itemize. How much that means to you is all dependent on your individual situation. Reasons like this are why it's a good idea to retain the services of a decent accountant. You can do it yourself and sure Jackson Hewitt or H&R Block MAY get you all the money you deserve, but nothing beats a real tax professional.
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Old 09-28-2010, 12:44 PM
 
Location: West Orange, NJ
12,545 posts, read 18,432,480 times
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Quote:
Originally Posted by NJGOAT View Post
For most people it generally makes the difference between taking the standard deduction and being able to itemize. How much that means to you is all dependent on your individual situation. Reasons like this are why it's a good idea to retain the services of a decent accountant. You can do it yourself and sure Jackson Hewitt or H&R Block MAY get you all the money you deserve, but nothing beats a real tax professional.
i only use an accountant during complex years. taxes are pretty straightforward. a tax professional is just using something similar to turbo tax anyways. unless you truly have a complex situation with home office writeoffs or lots of gray areas, it's a pretty easy DIY job.
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Old 09-28-2010, 01:39 PM
 
14,780 posts, read 35,988,311 times
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Quote:
Originally Posted by bradykp View Post
i only use an accountant during complex years. taxes are pretty straightforward. a tax professional is just using something similar to turbo tax anyways. unless you truly have a complex situation with home office writeoffs or lots of gray areas, it's a pretty easy DIY job.
I did it myself for a few years, but found it was just as easy to pay a small amount to have someone else do it, especially considering the cost is tax deductible, lol. If the returns are pretty straight forward, it's easy, but the tax code has been changing a lot the past couple years. With kids, a house and multiple deductions I'd rather have someone looking it over.
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Old 09-28-2010, 01:58 PM
 
Location: NJ
12,284 posts, read 31,759,606 times
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Quote:
Originally Posted by NJGOAT View Post
I did it myself for a few years, but found it was just as easy to pay a small amount to have someone else do it, especially considering the cost is tax deductible, lol. If the returns are pretty straight forward, it's easy, but the tax code has been changing a lot the past couple years. With kids, a house and multiple deductions I'd rather have someone looking it over.
only if your miscellaneous expenses exceed 2% of your AGI.
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