{"id":534,"date":"2012-01-11T13:12:59","date_gmt":"2012-01-11T18:12:59","guid":{"rendered":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/?p=534"},"modified":"2012-01-11T13:12:59","modified_gmt":"2012-01-11T18:12:59","slug":"edgartown-new-homeowner-questions","status":"publish","type":"post","link":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/2012\/01\/edgartown-new-homeowner-questions\/","title":{"rendered":"Edgartown New Homeowner Questions"},"content":{"rendered":"
<\/em><\/p>\n

Q: We bought a house this year! We put $133,000 down and the bank financed $428,000. Can I write this off on my 2011 taxes? How much of it?<\/em><\/p>\n

A: First things first: Congratulations! You’ve become a homeowner, and seem to have done so using an enviable financial arrangement. But now that you own a home, you might need to shift the way you think and look at some things, including your taxes and other financial matters.<\/p>\n

Owning a home is one of those landmarks that signify financial adulthood. And one of the things that responsible financial adults do is get professional help when the situation requires it. Taxes are one of those areas that often do warrant calling the pros in<\/p>\n

I’m not just shilling for the tax prep industry here, either: The ultimate aim of using a tax professional is to make sure you get every deduction, credit and other tax advantage for which you qualify, without jacking up your chances at triggering the universally dreaded Internal Revenue Service audit by claiming dubious deductions.<\/p>\n

Your mortgage debt is fairly small, as was your home’s purchase price, though I don’t know whether they are large or small in the context of your overall financial picture (i.e., income, assets, investments, etc.).<\/p>\n

The fact that you saved or somehow came up with such a sizable chunk of change to put down makes me hesitate to assume that your finances are as simple as your mortgage balance might otherwise lead me to believe.<\/p>\n

So, it might be the case that you can easily handle your own taxes — in fact, it’s even possible that your real estate-related deductions won’t even outweigh the standard deductions, so that filing a simple form without even itemizing your deductions is actually the financially advantageous move.<\/p>\n

Whether that’s the case cannot be determined in a vacuum — you may have other financial and tax issues going on. But with software and tax preparation services as inexpensive as they are, starting at under $20 for simple returns, I think it behooves you to get some professional advice and ensure you get the deductions you need.<\/p>\n

Hiring a tax preparer might be a worthwhile investment to make, even if just this year, so he or she can brief you on what records you should keep and strategies you should do moving forward, like home repair and improvement receipts, or documentation of your use of an area of the home as a home office.<\/p>\n

Now, let’s talk more substantively about the deductions that are available to you, in the event you do decide to itemize your taxes (IRS Publication 530 offers a more nuanced view into Tax Information for Homeowners<\/a>):<\/p>\n

1. Mortgage interest deduction<\/strong>. Assuming this home is your personal residence, 100 percent of the mortgage interest you owe and pay before Dec. 31, 2011, is deductible on your 2011 taxes. In January, your mortgage lender will send you a form documenting the precise amount of interest you paid, although most lenders also now make this form immediately available to borrowers online.<\/p>\n

Chances are good that you paid some amount of advance interest on your home loan at closing — expect to see that on your statement from your lender, but you should also be able to find it on the HUD-1 settlement statement you received from your escrow agent at closing.<\/p>\n

2. Property tax deductions<\/strong>. Again, assuming that this is the home you live in most of the time, you should be able to deduct 100 percent of the property taxes you’ve paid to your state and\/or local taxing agency this year.<\/p>\n

3. Closing-cost deductions<\/strong>. Discount points and origination fees paid to your mortgage lender and\/or broker at closing are frequently deductible, but there are rules around this, which tax software and\/or professionals can help you make sure you meet. Note that, according to Internal Revenue Service Publication 530<\/a>, “You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home.”<\/p>\n

There are various home improvements (especially those that increase your home’s energy efficiency), state and local tax credits for buying a foreclosure, and other tax advantages that might be available to you.<\/p>\n

My advice is to work with an experienced, local tax preparer or, at the very least, use reputable tax preparation software to ensure that you get the maximum tax advantages available to you as a result of your new role as a homeowner.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Q: We bought a house this year! We put $133,000 down and the bank financed $428,000. Can I write this off on my 2011 taxes? How much of it? A: First things first: Congratulations! You’ve become a homeowner, and seem to have done so using an enviable financial arrangement. But now that you own a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/posts\/534"}],"collection":[{"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/comments?post=534"}],"version-history":[{"count":1,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/posts\/534\/revisions"}],"predecessor-version":[{"id":535,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/posts\/534\/revisions\/535"}],"wp:attachment":[{"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/media?parent=534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/categories?post=534"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/carrollandvincent.com\/marthas-vineyard-real-estate\/index.php\/wp-json\/wp\/v2\/tags?post=534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}