Did you know that you can get a tax break for buying a house, as well as for many of the ongoing expenses of homeownership You could stand to save thousands of dollars at tax time, but first you have to know which of your expenses qualify and whether you want to itemize your deductions or take the standard deduction.
One of the best ways to offset the costs of buying a property is to tap into available tax deductions. Keep in mind that most of these are only available to people who are using the property as their primary residence. Here are some of the costs that can be deducted after buying a home:
Should The First-Time Homebuyer Act of 2021 become law, many low-income and middle-income Americans would qualify for a tax credit for buying a house. Plus, the tax credit would not need to be repaid unless you sell the home within the first four years of ownership.
Moved during the year - It is important to know the date you moved out of the home you are selling or renting and the date you moved into the home you are buying or renting. If you owned more than one home, you may only claim the prorated taxes for homes with a taxable value of $143,000 or less. If you sell your home for more than you paid for it, plus improvements, you will have a capital gain. In most cases the gain is not taxable, however, it must still be included in your total household resources.
Individuals may report and pay any Massachusetts use tax due on their personal income tax return (Form 1, Form 1-NR/PY for part-year residents). Taxpayers can self-report (\"safe harbor\") an estimated amount of use tax based on their Massachusetts adjusted gross income. \"Safe harbor\" excludes purchases of items that have a sale price of $1,000 or more.
For a paper return to be considered timely filed, DOR must receive it on or before the due date, or if delivered after the due date, it must be postmarked by the U.S. Postal Service or date-stamped by a private delivery service at least 2 days before the due date.
Every buyer who is not required to register or title the vehicle in Massachusetts, must file a completed Form ST-7R: Motor Vehicle Certificate of Payment of Sales or Use Tax by the 20th day of the month after the buying, transferring, or using the vehicle, and pay any applicable tax to DOR or the RMV. For faster processing, DOR recommends you file and pay the Form ST-7R online with MassTaxConnect.
Earlier this week, we received a letter from a local real estate agent. She has clients who are hoping to buy our home or one in our area so that they can live near the rest of their family (yes, there are grandkids involved). I'm not going to lie: I thought about selling. We're homeowners again, after previously swearing off buying in favor of renting (you can read my original story here and my follow-up here) and despite all of the comments, emails and occasional threatening phone calls from folks who read my story, I still believe that home ownership isn't for everyone.
So who loses Struggling buyers. In a tough market, buying a house can be difficult. If you can't afford to put down at least 20% of the purchase price of your home, your lender may want you to pick up PMI. The homeowner pays the PMI but the benefit flows to the lender in the event of a default. Without a deduction for PMI, the process of buying a home is more expensive for some taxpayers.
Occupancy: For a conventional loan, you need at least 25% for the down payment when buying a 2 to 4 unit investment property. You can't use an FHA loan to buy an investment property. FHA requires that you live there for at least a year after buying it.
You may need reserves when buying a property with 3 or 4 units. Reserves are funds you have left over after closing. Typically lenders require three months of the housing payment in reserve for unexpected vacancies, repairs, or costs you incur as a new owner.
Occupancy:For a conventional loan, you need at least 25% for the down payment when buying a 2 to 4 unit investment property. You can't use an FHA loan to buy an investment property. FHA requires that you live there for at least a year after buying it. 59ce067264