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Is there any tax return benefits when buying a new house?
Thanks.
instead of the standard deduction you can take the interest on the house as a deduction. You can also begin to itemize deductions that you couldnt have taken before.
In a word - no. I had people telling me once I bought my house I'd get all kinds of money back on my tax refund every year. Yeah right, $300 a year! Woot! (roll eyes...)
Depends on how you do your taxes, but the deductible interest and the deductible property tax usually put people well beyond the standard deduction. If you have kids, you are now waaay beyond standard deduction. Even if you had no items that could be itemized before, you will probably come out anywhere from a little ahead to a lot. A loan amount of 225k at 4% accrues right around 10k interest in the first year. Assume that is a 250k house or thereabouts, and you have another 6k in taxes. Standard deduction is 11.6k, so you get to deduct 4.4k more. In a 25% tax bracket, you will save about 1,100 in taxes.
This assumes you have no other qualifying deductions, but if you donate at all or have kids, that can add up, as well (which w/o the house is probably subsumed into the standard deduction).
As to the $300.....if you didn't have the house, maybe you would be paying a 1,000 or something .
Depends on how you do your taxes, but the deductible interest and the deductible property tax usually put people well beyond the standard deduction. If you have kids, you are now waaay beyond standard deduction. Even if you had no items that could be itemized before, you will probably come out anywhere from a little ahead to a lot. A loan amount of 225k at 4% accrues right around 10k interest in the first year. Assume that is a 250k house or thereabouts, and you have another 6k in taxes. Standard deduction is 11.6k, so you get to deduct 4.4k more. In a 25% tax bracket, you will save about 1,100 in taxes.
This assumes you have no other qualifying deductions, but if you donate at all or have kids, that can add up, as well (which w/o the house is probably subsumed into the standard deduction).
As to the $300.....if you didn't have the house, maybe you would be paying a 1,000 or something .
No kids, and I'd probably be back to doing a 1040EZ and getting $300 less a year on my refund. I never had to pay the IRS anything!
Plus I have a $106k house. I figure if it was worth more, I'd get back more.
we got back 5k last year when we were renting...bought a house last April...our refund this year is over 9k...
Is there no way to get the tax deducted from your income reduced, so that you keep your money upfront instead of getting it back from the government a year later?
Is there no way to get the tax deducted from your income reduced, so that you keep your money upfront instead of getting it back from the government a year later?
Is there no way to get the tax deducted from your income reduced, so that you keep your money upfront instead of getting it back from the government a year later?
Yes. When you started working you filled out a W-4 with your employer. You can change it at any time. There's a worksheet on the back of the W-4 where you can calculate your exemptions. Basically it will have you add up your mortgage interest, property taxes, other deductions and other income (for example interest) and divide by 3800. Its perfectly legit for a single person with a home to claim 5 exemptions on their W-4 because the only purpose on the W-4 is to get your withholding closer to your tax liability. At the end of the year when you file your taxes you still write "1" (if you were a single person) and should get less than $1000 back.
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