Sandra asks…
Question on how to use first time homeowner credit and deduction of mortgage interest.?
My fiance and I bought our 1st home in May 08. We will not be married by the time we file taxes.
I make more than the income cap for the 1st time homeowner credit. She doesn’t. However, it seems like I should deduct the interest on the mortgage on my return since i’d be in a higher tax bracket.
Would I be able to claim the mortgage interest and have her claim the homeowner credit? If not, what would be the best way to handle?
Thanks!
answers:
Actually, she can claim ALL of the FTHB credit.
The IRS qave away the store on this one. See IRS notice 2009-12. Example 5.
Http://www.irs.gov/pub/irs-drop/n-09-12.pdf
As for the interest/property taxes, those have to be split appropriately.
David asks…
How does depreciation and deduction of mortgage interest save a home owner money in taxes?
What are the calculations that will show me how these two items affect cash flow for a home owner?
answers:
Go to http://www.irs.gov/pub/irs-pdf/f1040.pdf and look at the basic 1040 statement. You will see that line 22 is your total income
and that line 37 is your total deductions to AGI (adjusted gross income). If you look on line 40 it will say itemized deductions which is deducted from AGI along with personal and dependency exemptions and other stuff which is subtracted from AGI to arrive at your taxable income. Mortgage interest is included in the itemized deductions (along with charity, casualty, medical ect.).
So unless you chose the standard deduction over your itemized deduction, mortgage interest will lower your taxable income.
As for deprecation, that deduction is only available to businesses.
Sandy asks…
Think the GOP plan to eliminate the mortgage interest deduction is a good one?
Personally, I think that eliminating the mortgage interest deduction would be a very bad thing for the economy. The affordability of homes factors in the ability to write off mortgage interest. So, eliminating this deduction would immediately cause homes to lose value. Do we really want homes to lose MORE value in the middle of a crisis that was exacerbated by a real estate crisis and homes losing their values?
answers:
Not that I think that repubs are trying to do away with that, but I will answer anyway.
Getting rid of the deduction sounds like a dem plan, not repub…after all it is a tax loophole. Dems hate tax loopholes do they not?
Oh wait, they hate the loopholes until they are directly affected by them. That sounds a bit hypocritical of dems. But then again, dems are hypocritical about so many things.
Chris asks…
If i pay the mortgage interest for my son’s home can I use the deduction on my Schedule A?
My wife and I plus my son and daughter all live in the same house – owned by my son. I pay all the mortgage for the entire year. Can I use the mortgage interest deduction or must it be the home owner to use the deduction? Also I pay the property taxes, can I deduct them on Sch A? I have no property in my name. Thank You.
answers:
No you cannot deduct the amounts because you do not own the home.
These amounts could also be considered to be rental payments that you are making to your son that he would be required to report as income on his 1040 income tax return using the schedule E of his 1040 income tax return.
Hope that you find the above enclosed information useful for your situation.
Joseph asks…
Do republicans know that Herman Cain wants to eliminate Mortgage Interest deduction on your home?
AND MAYBE CAPITAL GAIN EXEMPTION WHEN YOU SELL YOUR HOUSE. How bad is that ? He will never get my vote
answers:
Who cares, he’s not gonna win.
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