There may be many tax deductions for purchasing real estate through use of tax deductions. Deductions minimize your taxable income and therefore lead to fewer taxes. It is useful to understand the tax impact before purchasing or when evaluating renting and buying. This article offers details on Exeter NH tax deductions for purchasing real estate.
Tax Deduction Criteria
Not everybody can take advantage of tax deductions. When preparing your taxes, you can opt for the standard deduction or itemized deductions, whichever is higher. If you purchase an inexpensive home, the deductible figures may not add up to higher than the standard deduction. Other personal variables could affect this as well. Only an accountant can offer a true evaluation of the tax benefits of buying a residence taking into consideration your personal finances.
Usable Property-Related Costs
Only the interest portion of your loan payments are tax deductible. In the early stages of having a property, you get charged primarily for interest than principal. As a result, the amount of deductible interest is significant when you first own a home than in subsequent years. Your mortgage company will send you a statement each year totaling the mortgage interest paid on your property.
Real Estate Taxes
Real estate property taxes are also be tax deductible. Real estate taxes are an annual figure but are traditionally billed in quarterly increments. These taxes can be included in your mortgage statements, but consider keeping copies of the property tax statements mailed directly to you. The amount in mortgage statements may not be accurate.
If you bought your residence within a special time frame and if you are within a qualifying income bracket, you may be able to deduct mortgage insurance payments. MI is paid on a monthly basis for mortgages more than 80% of the home value and until the loan amount drops below the 80% mark.
Closing Related Fees
Consider keeping a the original of your closing settlement statement. A variety of charges such as points, adjusted real estate taxes, and pre-paid interest could be deductible. Give the paperwork to your accountant.
The above is details on Exeter NH tax deductions for purchasing real estate and addresses primary residences. If you own investment property, the potential deductions differ. This information is meant solely as a generic overview. Always ask a tax professional for expert information adapted to your personal situation or to your type of property.