First Time Purchase, New Home Buyer Tax Break 2009, 2010
Purchasing your first home can allow for many additional tax breaks. You will be able to take many new deductions that will lower your tax liability. If you normally just take the standard deduction on your tax return, you will need to itemize to receive all of the deductions possible.
Mortgage Interest
Deducting your mortgage interest will give you the largest deduction for purchasing a home. Your lender should provide you with form 1098 that will list your mortgage interest that was paid over the year. Most taxpayers are able to deduct a hundred percent of their mortgage interest. The amount will decrease if your mortgage exceeded one million dollars.
Taxes
The chances are if you own a home you will have to pay property taxes on it every year. Your property taxes are deductible for as long as you own your home. If you have an escrow account, then your lender should send you a statement of the amount of property taxes you have paid. If you do not have an escrow account then you will be responsible for keeping track of the deductible amount.
Points
When you purchase your home some of the money paid to lender to receive your loan is called “points”. You will be able to deduct your points in the year that you paid them as long as your loan was to purchase or build your home. You can also deduct your points when you refinance as well. When you refinance you will have to deduct them over the life of your loan.
If you are a first time home buyer, TurboTax Online will make sure you’re not missing important home-related tax deductions.