5 Tax Breaks First-Time Homebuyers Can Use to Put Cash Back in Their Pockets

5 Tax Breaks First-Time Homebuyers Can Use to Put Cash Back in Their Pockets

 

When buying a home for the first time, the associated costs are usually one of homebuyers’ major concerns. From the down payment to the closing costs and incidental costs, there can be a lot to consider.

 

While these costs can be overwhelming, there is good news: Uncle Sam offers a handful of tax breaks to first-time homebuyers. Here’s a look at these tax breaks.

 

Homebuyer Tax Break #1: The Mortgage Interest Deduction

 

As one of the biggest tax breaks for homebuyers, this applies to interest on loans as high as $1 million (or, if married couples file individually, it would apply to loans as high as $500,000). Appearing itemized on a Schedule A form, the interest amount covered by this tax break tends to be substantial for first-time buyers because they usually have higher interest rates (when compared to experienced homebuyers).

 

To qualify for this tax break, homebuyers must have:

 

·       Filed a 1040 form with itemized deductions

·       Have a mortgage based on a secured debt (for a qualifying home).

 

Effectively, this tax break can reduce homebuyers’ taxable income.

 

Homebuyer Tax Break #2: The Mortgage Interest Credit

 

With this homebuyers’ tax break, the credit can be directly applied to a tax bill. So, if a homebuyer received a $1,000 mortgage interest credit and had a $1,000 tax bill, (s)he could apply the credit to satisfy the tax bill, instead of having to cut a check to the Internal Revenue Service (IRS).

 

To claim this tax credit, a homebuyer would need to:

 

·       Have a Mortgage Credit Certificate, which should be received when buying the home

·       Complete IRS Form 8396

·       Apply the credit in a different year than the mortgage interest deduction.

 

Homebuyer Tax Break #3: The Property Tax Deduction

 

This tax break is an itemized deduction for a Schedule A form. According to the IRS, deductible real property taxes:

 

·       DO “include any state, local, or foreign taxes based on the value of the real property and levied for the general public welfare”

·       DO NOT “include taxes charged for local benefits and improvements that directly increase the value of the real property, such as assessments for sidewalks, water mains, sewer lines, parking lots, and similar improvements.”

 

Homebuyer Tax Break #4: The Energy Tax Credit

 

Up to 30 percent of the cost of energy-efficient home appliances can be covered by this tax credit. Including more than 70 product categories, this credit can go a long way towards saving homebuyers money as they replace their appliances.

 

Homebuyer Tax Break #5: The Home Enhancement Break

 

Is your new home a fixer upper? If so, you may qualify for the home improvement tax break. Qualifying home improvements can include anything from a new central air conditioning installation to roof replacement, room additions, and more.

 

While you can’t use this tax break in the same year as the home improvements are made, you CAN claim it in the year when you sell your home – and that may offset any capital gains taxes incurred from the sale.

 

More Good News: Homebuyers Can Get Even More Money Back by Working with New Home Gurus

 

While the tax breaks discussed above can mean more money in the pockets of first-time homebuyers, these tax breaks are not the only way for homebuyers to get cash back after their purchase.

 

Another way to get money back with a new home purchase is through the commission-sharing program offered by New Home Gurus. Available to those buying new homes in Texas, our program offers homebuyers HALF of the buyer’s commission back at closing.

 

This can mean that homebuyers who work with New Home Gurus can expect to get back anywhere from $4,500 to $12,000 at closing.

 

Find Out How Much Cash Back You’ll Get at Closing
Call (281) 668-8124 or Email Us

 

When you work with New Home Gurus, you get support and guidance throughout the home purchase process, from drafting an offer through closing.

 

To find out more about how our commission-sharing program works, simply contact us! We are ready to answer your questions and help you get into your dream home!

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