Re: Taxes

Ron <[EMAIL PROTECTED]> wrote:

>I'm a newbie with a possibly stupid question. My wife and I are 
>closing on our first home this month. Can you give me an idea how 
>much more complicated our taxes will be because of this, come 
>April? I'm sure it depends on the specific situation, but ballpark, 
>how big a tax headache is buying a house? I've used an online tax 
>service to file for the past two years (Taxbrain) and am really 
>hoping I can keep using it. I'd hate to have to start paying a pro. 

Presumably you are in the US (Usenet is a global medium)?

It's not a simple answer and without knowing more details, not possible to
answer.

It depends on wether you are buying the home outright, or plan on taking out a
mortgage and what state you live in. If you are buying the house outright, there
will be no federal tax implications or additional tax reporting required until
you sell the house. At that time, depending on how much the house has
appreciated, there may be capital gains due. 

Some states have one time real estate transfer taxes - these taxes may be
deductable on your federal return for the year in which you purchase the house.

Assuming you aren't in the top 10% income bracket, you are purchasing the house
with a mortgage and we aren't talking more than a starter home, you still get to
crunch some numbers.

Given the time of the year, you probably won't have much interest paid this
year, unless you chose to buy down your interest rate. You also may not have
much in the way of prorated real estate taxes - but this depends on when local
taxes are paid. These are the two major itemized deductions, so there's a good
chance you will be better off with the standard deduction this year. No
difference than what you have been doing.

Next year, things may change, depending on the amount of interest & taxes you
paid, you might be able to save a bit by itemizing.

In either case - most legit tax programs will handle the computations.