2775783
My daughter and I bought a condo together this year. I paid all the down payment, closing costs, inspection fee, etc. She is now paying the monthly mortgage payments and HOA fees while I pay off my car loan. Both of us are on SS and have no taxes withheld. When we file separately, who deducts what? Or does it even matter since for a few years past we have received no tax refunds? We both file the short form.
Thank you.
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The down payment, closing costs, inspection fees, etc. are not deductible so they are irrelevant for your upcoming tax return. The only things you can deduct are mortgage interest paid and property tax paid in the tax year. Unless you have enough itemized deductions to exceed your standard deduction, then even those will have no effect on your refund or tax due. If you will have enough deductions to itemize then you can enter the amount that YOU paid for interest and property tax on your tax return; your daughter can enter the amount that SHE paid on her own return.
And...there is no short form. The short form has been gone since the tax laws changed for 2018 and beyond. Everyone uses a Form 1040.
STANDARD DEDUCTION
Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.
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. (Only the amount that is MORE than 7.5% of your AGI counts) 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.
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
The down payment, closing costs, inspection fees, etc. are not deductible so they are irrelevant for your upcoming tax return. The only things you can deduct are mortgage interest paid and property tax paid in the tax year. Unless you have enough itemized deductions to exceed your standard deduction, then even those will have no effect on your refund or tax due. If you will have enough deductions to itemize then you can enter the amount that YOU paid for interest and property tax on your tax return; your daughter can enter the amount that SHE paid on her own return.
And...there is no short form. The short form has been gone since the tax laws changed for 2018 and beyond. Everyone uses a Form 1040.
STANDARD DEDUCTION
Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.
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. (Only the amount that is MORE than 7.5% of your AGI counts) 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.
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
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.
Thank you for the detailed information about what is and is not deductible of all those costs involved in home buying.
Just to clarify for all readers, your response in the first paragraph was not appropriate to my question. I did not say I was a first-time home buyer. All the other information was good detail. I appreciate the time you took to be thorough.
Because my daughter and I do not have taxes withheld from our SS benefits, we expect nothing to be refunded to us even if we were over the standard deductions. We just want to be sure to do what is required by law.
If you only get Social Security income it is not taxable and you don't need to file a return at all. So you don't need any deductions. Do you have any other income?
I have a small annuity that was taken once a year as the Minimum Required Withdrawal. I think that is what it is called.
I wanted to be sure I was not missing something required since I put a very large deposit down from the sale of my home 3 years ago. This amount of money has earned interest over the years before I used it for the down payment.
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