First Time Home Buyers

Taxes

If you are a first time home buyer (defination--have not owned a home for the last 3 years) and you purchase a home before December 1, 2009, there are tax credits you can claim on both your federal and state tax returns.  The Federal credit is up to $8,000 and the State credit is up to $1,800.

Additionally,  the interest on your mortgage, your closing costs, property taxes, and many other expenses are tax deductible.   You will need to consult with a tax advisor to learn the particulars of your individual situation.

Example: A young couple in a 28% tax bracket who already itemizes, purchases a $180,000 home with a fixed 6% interest rate will save more than $250.00 per month on their income tax.

Move-Up Buyers
Most homeowners can sell their home every two years and pocket up to $250,000 (for single tax filers) or $500,000 (married filing jointly) in profit with no capital gains tax.

Scale-Down Buyers
Homeowners may scale down their housing without penalty, no longer do you have to purchase a home of equal or greater value.

Home Equity Loans
Interest is fully deductible on home equity loans, including a second mortgage or equity credit line,  up to $100,000, regardless of how the proceeds are used.

Vacation Homes
Mortgage interest on a second home is also deductible, there are separate tax rules depending on the owner's personal use days.  A residence is a vacation home if it was used personally more than 14 days or 10% of the days it was rented (if rented more than 140 days).

Before making decisions regarding selling or purchasing real estate and before filing your income taxes, you should consult with a professional tax advisor.