Making Your First Home Purchase

Tax Implications from this Life Changing Purchase...

home purchase tax implications Author: Jenny Shilling

Tired of paying rent to someone else and getting nothing in return? Getting ready to make that first home purchase? Buying a home, whether it's your first or fifth, will have an impact on your taxes. Luckily there are several tax deductions available when you make that purchase.

Mortgage Interest
When you pay rent for a house or an apartment you are helping someone else make their mortgage payment. When you make your own mortgage payment the IRS allows you to deduct the interest included in your monthly payment. At the beginning of your loan period the amount of interest you pay is at its highest level. Claiming the mortgage interest deduction may result in a larger tax refund for you at the beginning of your loan period.

To make this claim you will need to itemize your deductions. You will not be able to use the standard deduction for your return. You will receive a form 1098 at the end of the year from your loan provider detailing the amount of interest you have paid throughout the year.
Property Taxes
Most times your property taxes have been included in your monthly billing. The amount of property tax paid can also be deducted as part of your itemized deductions
Home Office Deduction
If you plan on using a portion of your home as a home office you may be able to make some additional deductions. Eligible deductions for a home office include utilities, home repairs, and internet expenses. You must use your "office" exclusively for work to qualify for any home office deductions.

The qualified tax professionals at The Tax Office, Inc., are available to answer any questions you may have about purchasing a new house, the tax implications involved, or simply any tax related questions.