So, you own a house. Feels pretty "adult" of you, right? And then people start talking about NEGATIVE EQUITY. You don't know what it is, but...IT. SOUNDS. BAD. Do
Read this before you FILE YOUR TAXES this year!
THEY SAY that you get to "write things off," if you own a home, but let's address the elephant in the room: MOST OF US, don't know what that means. Here are some things you may be able to write off this year, if you purchased or (already owned a home) in 2018:
- closing costs: In our recently hot market, there was a major shift. For years, buyers have "asked" sellers to pay their closing costs and reluctantly, many sellers have agreed. With such a competitive market this past year, many buyers choose to pay their own closing costs to make their offers look more attractive to sellers. Well, if YOU were one of those buyers, you get to write off some of those closing costs! *Examples include: real estate taxes, some loan origination fees.
- mortgage interest: can I get an AMEN? Interest. The fee that the bank charges us, further proving that they are NOT giving us money because they like us...they aren't just doing it because that's how THEY make money. Well, sister (and brother), you can write off the interest you pay UP TO $750k, which are MOST owners in our local market (if you purchased your home prior to 2017, your cap is $1 Million)
- state and local taxes: oh, Hi, Uncle Sam. You can deduct state and local taxes (wihch includes property, sales and income taxes up to $10k) - that number is lame to people in some states, but here in sunny South Carolina, where our taxes are affordable, $10k just about does the trick!
- moving expenses: IF YOU'RE AN ACTIVE MEMBER OF THE ARMED FORCES MOVING TO A NEW STATION, you can deduct your moving costs.
4 Things to note:
- you should consider itemizing these costs if your deductions total more than the STANDARD DEDUCTION
- use this TURBO TAX FORM (or talk to your accountant) to determine your deductions
- standard deductions for single people: $12,000
- standard deductions for married people (filing jointly): $24,000
- you'll want to itemize all or some of the items listed IF your deductions total MORE than the the standard deduction amounts ($12k/$24k)
Thinking of buying a home in 2019? Here are 2 things to consider so you can capitalize on your deductions, when you file your taxes in 2020:
- buy a less expensive home so you don't hit the cap on mortgage debt (this mostly applies to REALLY EXPENSIVE HOMES)
- if you're buying one of these pricey palaces, make a bigger down payment so your original mortgage doesn't exceed the $750,000 cap
This concludes your tax training! Now, go hug your accountant!
My husband and I are the founding members of a top selling Real Estate team in Anderson, SC. I have been a native of the area for over 20 years and attended elementary, middle, high school and college....