Bought new house as a primary residence which got damaged before I was able to move-in. Its being fixed, what will be the tax status of the new house for this year?

[xmasbaby0]

You do not enter the purchase of a house on your tax return, nor do you enter whether you have moved in to the house.    You enter mortgage interest paid, property tax paid and possibly loan origination points.   The fact that you have not moved in yet is irrelevant.

HOMEOWNERSHIP DEDUCTIONS

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

Standard Deduction

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

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, private mortgage insurance (PMI) and loan origination fees (“points”) that you paid in 2022.  You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February.

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

[paritosh_tyagi]

I didn't clarify that I already have a primary home and I was planning to make the new home a primary home and make current home an investment home. My question is regarding the classification of the new home - is it a primary home/investment home/secondary home? What tax deductions I can take are different in all these cases. I did buy the house earlier this year and interest + property tax is over the standard deduction. 

[xmasbaby0]

If you have not yet moved out of your previous/current home, the "new" house is a second home, for which you can enter the things already mentioned----but you are still subject to the $10,000 cap for SALT on the two homes combined.   When/if you convert the "old" house to a rental property, post some questions about that in the user forum.   It does not sound like you are there yet.

[Opus 17]

The new house would only become your main home when you actually move in. For now, it is a second home.  These are the tax consequences I can think of.  

1. You are allowed to deduct mortgage interest on your main home and one second home. If you already have a different second home (making this your third home) then you will have to pick which of your second homes to deduct the mortgage interest for.

2. If and when you sell this new home, you are entitled to a $250,000 capital gains exclusion (or $500,000 if you are married filing jointly with your spouse) as long as you owned the home at least two years, and lived in it as your main home for at least two out of the past five years.  Although the ownership clock on the exclusion started when you purchased the home, the clock will not start on using the home as your main residence until you actually begin to use the home as your main residence. This will only affect your capital gains tax if you need to sell this home less than two years from when you move in. 

3. Any repairs that you make are not tax deductible and do not change your cost basis in the home. Any improvements that you make are not tax deductible but they add to your cost basis and may reduce your capital gains when you sell the home. A repair restores the property to as-was condition, while an improvement adds value to the property or extends its useful life of the home or its sub systems.  For example, if a tree fell on the roof and punched a hole, and you repair the hole, that is a repair. If you find the entire roof needs to be replaced, that is an improvement, because you get a new life cycle for the new roof.

4. If you paid if you paid mortgage points to get a discounted interest rate, you generally have the option of deducting all of the points in the year you purchased the home, or spreading them out over the life of the loan. If you can’t deduct the mortgage in 2022 because this is not your main or the second home that you choose to deduct, then when you start deducting the mortgage interest in 2023, you will only be able to use the method of spreading the points out over the life of the mortgage. 

[leeloo]

Once you actualy move in, it will qualify as your primary residence. Apart from what has been mentioned, at the time when you decide to sell, you can potentially exclude all or part of the gain. Having  a primary residence can come into play in other situations such as working in multiple states.

https://www.irs.gov/taxtopics/tc701