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yvonnemckay4
New Member

My wife and I purchased our first ever home in 2020. Do we qualify for any type of tax credit?

 
2 Replies
xmasbaby0
Level 15

My wife and I purchased our first ever home in 2020. Do we qualify for any type of tax credit?

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 2020.  You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February.

 

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. 

 

 

2020 Standard Deduction Amounts

 

Single $12,400   (+ $1650 65 or older)

Married Filing Separate  $12,400   (+ $1300 if 65 or older)

Married Filing Jointly $24,800   (+ $1300 for each spouse 65 or older)

Head of Household $18,650  (+ $1650 for 65 or older)

 

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.

 

**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.**
HelenC12
Expert Alumni

My wife and I purchased our first ever home in 2020. Do we qualify for any type of tax credit?

If you just bought a house, you may be able to deduct:

Unless it's a rental, you won't be able to deduct homeowner's insurancerepairs, or home improvements. Also, moving expenses are no longer deductible for most taxpayers.

 

Be sure to hold onto your closing statement, as it lists expenses that could be deductible, like points and prepaid interest.

 

Also, start saving your home improvement receipts. You won't be able to deduct those right now, but they can reduce your gain (along with any capital-gains tax) when you sell in the future.

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