Buying a home in December has its perks: even if it closes on December 31, you still qualify for homeowner-related deductions for that tax year. Plus, you'll have less competition when you shop at home in winter. Knowing when to close your real estate purchase can be an advantage when it comes to paying taxes. You may want to consider delaying your December closing until January of next year, if that will benefit your tax return.
I would make this determination in several ways. You can also deduct the local property taxes you pay each year. The amount may appear on the Form 1098 you receive from your lender if you pay your taxes through an escrow account. However, if you pay them directly to the municipality, check your records or your checking account.
In the year you bought your residence, you probably reimbursed the seller for the real estate taxes that he or she had paid in advance after buying the home. If so, that amount will appear on your payroll. Include this amount in your real estate tax deduction. Keep in mind that you can't deduct monthly payments in your escrow account as real estate taxes.
Your deposits are simply money set aside to cover future tax payments. You can only deduct the actual amounts of real estate taxes paid from the account during the year. Winter is often the cheapest time of year to buy a home. Sellers are often motivated, which automatically translates into an advantage for you.
Most people suspend their ads from Thanksgiving to the New Year because they assume that buyers are scarce. Sellers who list at that time usually want to sell as soon as possible. They may even be more willing to offer additional benefits, such as appliances and window treatments. Ralph McLaughlin, real estate economist at Trulia, says that after several years of tight inventory and large price increases, certain fast-moving markets, such as Seattle, Denver, Salt Lake City and the San Francisco Bay Area, are finally showing signs of slowing down.
Seasonality plays an important role in the homebuying process, but there are other factors, sometimes equally important, to consider when determining the best month to buy a home. The best time to buy a home is when you are confident in your finances and your personal goals, because there is a lot of excitement during the search for a home. Regardless of the season, you'll want to make sure that your credit is in good shape and that your debt is under control before buying a home. The apparent savings derived from a good purchase price of a home can be quickly offset by a high interest rate.
Determining when is the best time to start homeownership means understanding the pros and cons of buying a home at different times and deciding when it's best for you. You'll also want to feel secure in your employment and income, ready to commit to living in a specific area, and prepared to face the various costs of homeownership and avoid becoming homeless. It might not be a good time to buy a home unless you're willing to keep an open mind and work with a limited selection. The housing market can fluctuate with the seasons, but there are also broader market forces that can influence current house prices, inventory, and interest rates.
Winter can also mean that you have to look for open houses and doors when the weather isn't ideal, depending on what part of the country you live in. Keep in mind that if you close on December 31 instead of January 2 (or the first business day after the New Year), you will be allowed to make the allowable deductions for the purchase of your home in the year you purchased it, even if the closing occurs on the last day of the year. Don't rule out homes that have languished on the market during the spring and summer sales seasons. Ultimately, however, the best time to buy a home (and get a mortgage) depends on your own financial and other preparedness.
One of the most important steps you can take to ensure that you're ready to start looking for a home is to get pre-approved for a mortgage. One of the reasons why sales inventory tends to increase when temperatures rise is because homes perform better. It's hard to overstate the importance of personal preparation when determining if you should buy a home. .
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