If you are not 59 1/2, you are going to pay the 10% early withdrawal penalty for taking money out of a 401k---buying a house is not an exception to the early withdrawal penalty like it would be for a traditional IRA. And you will owe ordinary income tax for the additional income. A very expensive way to make your down payment, unfortunately. You will receive a 1099R in January which must be entered on your tax return.
The ONLY things you get to deduct for your home ownership are mortgage interest, property taxes, and loan origination fees. And if you do not have a full year's worth of those, it is unlikely to affect your tax due or refund at all, if even a whole year's worth will someday. Your lender will issue a 1098 for those in January.
With the new higher standard deduction and the $10,000 limit on the amount of property taxes and other state and local taxes you can use as itemized deductions, it is difficult for many people to even have enough itemized deductions to exceed their standard deduction.
2019 Standard Deduction Amounts
Single $12,200 (+ $1650 65 or older)
Married Filing Separate $12,200 (+ $1300 if 65 or older)
Married Filing Jointly $24,400 (+ $1300 for each spouse 65 or older)
Head of Household $18,350 (+ $1650 for 65 or older)
(Also + $1650 if legally blind)
Home Ownership
There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.
Buying a home is not a guarantee of a big refund. Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home ownership deductions.
Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees. There are no deductions for appraisal, inspections, title searches, settlement fees. etc.
Your down payment is not deductible.
Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.
Home improvements, repairs, maintenance, etc. for your own home are not deductible.
Homeowners Association (HOA) fees for your own home are not deductible.
Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, and loan origination fees (“points”) that you paid in 2019. You should have a 1098 from your mortgage lender that shows this information.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
