How much (roughly) will buying a house (closing in November) affect my tax return next spring?
I will have made only 2 payments so I doubt I will have a big write off for interest...I m wondering if there is credits or anything that changes that will make my normal return different. I usually get back about 1800 federal being a single male claiming 0.
- ninasgrammaLv 74 years ago
You can deduct interest paid through the end of the year, real estate taxes paid, and points on the mortgage. You add this to your other itemized deductions (state income tax and a few other things),, and if the total is more than $6,300, you get a benefit. For example, if the total is $7,300, your benefit is $1,000 times your tax bracket, or $150 if you are in the 15% tax bracket.
There are no credits for home ownership.
When a closing is in November, you pay interest through December 1 at closing, and then your next payment is due January 1. So you will have no monthly payments in the year of the sale.
- Bostonian In MOLv 74 years ago
You won't have any tax savings at all. If you close in November you don't make your first payment until January.
Going forward it's also possible that you won't see much tax savings for 2017 either. You get a standard deduction of $6,300 (double that if you are married filing jointly) so unless your total deductions exceed that amount you won't get any tax savings from the home. With interest rates in the high 2s and low 3s you'll need a fairly large mortgage to generate any tax savings.
Even if you do have enough to exceed your standard deduction, only the amount above the standard deduction saves you any tax dollars. For example if you are single and your deductions total $7,300 and you are in a 25% marginal bracket, your tax savings will be $250 or less.
- JackLv 64 years ago
Buying a house in November will have no effect whatsoever on your taxes for 2016.
If you close in November, your first payment to the mortgage company will not be until (probably) January.
At closing, you will pre-pay November's interest (December's interest is due Jan 1).
You will not have paid enough interest to exceed the standard deduction (you can't itemize deductions).
There are no other tax "credits or anything".
- Max HooplaLv 74 years ago
Project your income for the rest of the year and do the same with mortgage interest and property tax then get a blank 2015 tax return and prepare a fake using those numbers. That will give you a pretty good idea what your 2016 return will look like. Trash the fake return so it doesn't get in the pipeline by mistake.
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- Beverly SLv 74 years ago
You won't have paid enough interest to allow you to itemize (though you should be able to when you file 2017 tax return). Some closing costs are deductible, but only if you itemize. Best bet is to take your closing paper work to your tax preparer & they can determine if your itemized deductions would be more than your standard. My guess is no since you are closing so late in the year.Source(s): Mortgage lender 30 years.
- SlickterpLv 74 years ago
Not at all if closing in November. You will not have paid near enough interest or property tax to go over the standard deduction for 2016. None of it will end up being deducted.
- JudyLv 74 years ago
Probably none Very unlikely that two payments will give you enough to itemize.. Standard deduction will most likely still be more. In future years, when you make payments all year, you might see several hundred dollars a year increase in your refund.
- Wayne ZLv 74 years ago
No effect as you will not have paid much in interest or property taxes for 2016.
- troLv 74 years ago
probably nothing, you will have only made at most two mortgage payments and the interest very likely will not be enough to use Sch A and itemize