How Buying a Home Will Affect Your Taxes

How buying a home will affect your taxes really depends on your personal situation. If your current income is high and your tax consultant tells you that you need to invest your money so you don't have to pay as much in taxes, buying a home or rental property is one way to do that. There are several items that you may deduct when owning property.

One time deductions include closing costs you paid when purchasing your new property. Closing costs include lender points and fees, appraisal fees, title and escrow fees, processing fees, notary fees, and pro-rated tax payments. If you purchased a property in the tax year, take your final HUD-1 Settlement Statement with you to your tax appointment. Your tax consultant will know what items are deductible.

You may also deduct home mortgage interest and real estate property taxes. If you bought your home early in the year, this deduction will be greater because you would have paid more throughout the year. Your mortgage lender will send you a Form 1098 that will show the interest you paid. It will also show the real estate property taxes you paid if they were paid by your mortgage lender through an escrow account. If you paid the real estate property taxes yourself, keep cancelled checks or receipts as proof of payment.

If you purchased a rental property, you may deduct the above items as well but you will also have to report any rental income you received throughout the year. In addition, rental properties allow for a depreciation deduction over a certain amount of years. If you manage the property yourself, you can deduct travel time and office space related to your rental. If you hire people to take care of this for you, those costs are tax deductible.

If you have spent money to fix up your rental units, these costs are tax deductible. Keep track of all your spending and save a complete record of these items in case you are audited. Home improvements on your primary home are usually not deductible.

Homeowner's insurance is not deductible unless you use part of your home for your business or you have a rental property. The full amounts may not be tax deductible so you need to check with your tax consultant.

Recently, the federal government has approved additional tax benefits for new homeowners. Again, check with your tax consultant to see if you qualified for any additional new homeowner tax benefits.

Once you have prepared your income taxes using these deductions, you may notice that your monthly mortgage payment is actually less if you receive เช่าคอนโด ทองหล่อ a refund after filing your taxes. Take you total cost of owning your home, subtract your refund, and divide by 12 to come up with your actual monthly payment.