How does buying a house change your income taxes?

JWilridge: How does buying a house change your income taxes?
We bought a house this year, what can I expect as far as my income tax return? Some one told me that you get the interest and the sales tax back, Is that true? It doesn’t sound right to me. It is our first house, but that would mean that the government pays the interest on our house, and that doesn’t sound right.

Answers and Views:

Answer by zaphodsclone
I not a tax expert, but I am only aware of a deduction for mortgage interest.

Answer by jean
you don’t get the money back, you just pay less tax.

let’s say your income was 50k, before you bought the house, you pay tax on the 50k you made. since you bought the house, you paid 10k on the interest of the loan, and 5k on property tax, now your income is down to 35k (50k-10k-5k).

suppose the tax bracket is 15%, you would pay 15% of 35k instead 50k

Answer by MG@cybtaxes
You can deduct mortgage interest, property taxes and mortgage insurance premiums (i.e., PMI, if you paid less than 20% down and bought in ’07) which you paid on a home you are legally liable for, paid during 2007, IF you have enough itemized deductions to file Schedule A.

If you bought late in the year, for example, your standard deduction ($ 10,700 this year for married filing joint) may be greater than your itemized deductions. Sales tax deductions are also an itemized deduction on Schedule A.

Often you need to figure your itemized ded and compare it to the std and take whichever gives you the highest figure…the lowest taxable income.

Good luck!