Copyright © Todd's Tax Service LLC. All rights reserved.
Todd's Tax Service LLC
"It's the American dream".
Is there a federal tax credit for new homebuyers? No. At this time there are no tax credits
available for new homebuyers.
What are the income tax implications of buying a home? Mortgage interest and real estate
taxes continue to be deductible for taxpayers who itemize their deductions on Schedule A. However, only a small percentage of taxpayer's will have enough deductions to itemize (exceed the standard deduction).
Is an energy tax credit available for improvements to my new home? Maybe. A small credit may
be available for certain energy related improvements like new windows, doors, or a new furnace.
A tax credit may also be available for homeowners who install solar, wind, or geothermal systems.
Please check with us regarding current credit limits etc as they change annually.
When do I file for my first Minnesota Property tax refund? You must own the home on Jan 2 in
order to qualify for the credit. Filing takes place after the county tax statements are issued
in the Spring.
What else should I know about new home ownership? The interest paid over the life of the mortgage is often more in total than the amount paid for the home. Whenever possible, finance your home over a shorter period of time (e.g. 15-20 years) in order to reduce the total amount of interest paid.
How can I speed up the repayment of my loan? Add additional principal payments to your monthly mortgage amount. Even small extra payments can result in dramatic savings over the life of the loan.
Is the gain on the sale of my home taxable? Generally not if you own and occupy the home for 2 years. Contact us if unusual circumstances apply to your situation as the rules can get complex with regard to the exclusion of gain on the sale of a principal residence.
How can I increase the odds of owning a piece of the American dream? Shop carefully for your new home. It is a major purchase. Realtors don't reject faulty real estate when asked to list properties, so buyer beware. Have an inspection. Talk to neighbors. Look at a variety of homes. Unless you plan to settle down for at least 4-6 years, renting may make more sense.
How can I build my investment in my home? Make incremental improvements using friends and relatives whenever possible to assist with larger remodel projects. Try bartering with a friend or neighbor. Smaller improvements can add up and create an attractive place to live as well as a great investment.
What kind of home should I buy? Consult with a realtor - one that takes the time to learn about your needs and goals. Think about the potential resale of your home - will it be easy to sell if you move in the future? What are the utility costs of your prospective home? (Ask to see utility bills). In rural areas, it is common to heat with propane. Can you add a supplemental heat source? What are the neighbors like? (Knock on a few doors and find out before you sign the purchase agreement.) How much will the home cost to insure? Look at the most recent property tax statement. Compare the county market value to the asking price. Can you afford the property taxes?
Should I buy title insurance? Your lender will likely require you to pay for title insurance when you close on your loan. The lenders policy protects only the lender's interest. I recommend that you also purchase an "owners policy" - title insurance to protect the buyer in case of a title issue on your new home. Be sure to ask your closing agent to thoroughly explain your options and costs to you before the date of closing.