3 Tax Deductions for 2018 Homebuyers to Seek
Potential tax deductions are one of the best things when you buy a house, and if you purchased in 2018, it’s important to take advantage of any you qualify for. At tax time, these can lead to significant savings, increasing the value of your real estate investment. If you’re gearing up to file your taxes, investigate the potential deductions below so you can enjoy the savings.
Potential Tax Deductions for New Homeowners
1. Closing Costs
When you buy a house, money spent to finalize the settlement is referred to as a closing cost, and the buyer and seller often share it. These are potentially tax deductible. While you’ll need to take a closer look at IRS guidelines for confirmation, deductions can be drawn from mortgage interest and real estate property taxes from the year the home was purchased in.
2. Mortgage Points
If you pre-paid interest—known as mortgage points—to get a lower interest rate over the life of your home loan, it might qualify as a tax deduction. It offers a strong return on investment because you can deduct the points and interest you paid in the year the home was purchased. You’ll need to itemize your tax return to do this, and home loans over $1 million don’t qualify.
3. Tax-Free IRA Withdrawals
Normally, if you withdraw from your IRA before you’re 59 1/2, you’ll have to pay a 10% penalty on the money withdrawn. However, the IRS allows withdrawals up to $10,000 from an IRA account without any penalties if the money is used for a down payment or closing costs when the owner buys a house. You’ll still need to pay taxes on the money you withdraw, and 401(k) accounts don’t qualify.
If you’re ready to buy a house in Ronan, MT, and the Mission Valley area, turn to Wright Real Estate Co. For over 15 years, they’ve helped clients make sound real estate investments and purchase their dream homes. You can count on a real estate agent working closely with you from start to finish and removing the hassle of buying a home. Visit their website to explore their listings, and call (406) 676-8610 to schedule a consultation.
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