When purchasing a home there are a few things you should know for your tax return that vary depending on if this is your first home or if you are selling and purchasing a new home.
If this is your first home, then there will be new things to remember at tax time, including real estate taxes paid, personal property taxes paid, charitable contributions, and mortgage interest paid.
You should receive a form 1098 for the mortgage interest paid and a receipt from paying your real estate and personal property taxes. These all need to be taken to the tax preparer. This is because many individuals will end up itemizing for the first time when they purchase their first home.
The property taxes and interest combined with your state income tax paid, personal property taxes paid and any charitable contributions will put you in a position where your itemized deductions are higher than the standard deduction. In addition to those receipts, you will need to take your closing statement to the accountant so he or she can pick up the prorated real estate taxes credited on the purchase. Also you may be able to itemize medical expenses, tax preparation fees, and some miscellaneous deductions that are allowed; for specifics on those you should speak to your accountant.
If, however, this isn’t your first home there are still items to think about. You will need to take both closings to the accountant from where you sold your previous home and where you purchased your new home. In addition, you will have two real estate tax receipts and two mortgage interest statements.
If you have lived in your previous home for less than two years you also need to explain to the accountant the reason for the move to see if it fits one of the exceptions to avoid claiming any gain on the sale. Also if you can provide the date you purchased the previous home, what you paid for the home, and what you paid for major improvements will allow the tax preparer to properly report the sale.
The Wassman CPA Services website and blog is meant to offer general information to our readers. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service. You should contact Wassman CPA Services for advice concerning specific matters prior to making any decisions.
