by Dell Claiborne
Is it smarter to buy your first home in January so that you’ll have a full year of interest to itemize on taxes along with the $8000 home buying credit?
Your question touches on a couple of subjects. I’ll try to clear a few things up for you. First, the idea that buying in January is very smart, because you have a full year to itemize and deduct the mortgage interest. Additionally, any points paid when obtaining the loan, and property taxes paid can also be deducted. I often advise buyers to buy early in the year for that very reason, but for some reason, historically, spring is when home purchases increase. So you’re right; buying in January will give you the best opportunity to maximize your tax deductions.
Now, here’s the problem: If you wait until January 2010, you won’t be able to take advantage of the $8000 Tax Credit. In my previous columns, I’ve talked about the $8000 New Homebuyer Tax Credit, established by the American Recovery and Reinvestment Act 2009. So, I won’t go into great detail about it at this time, but what I will point out is that the deadline for purchasing a home in order to receive the tax credit is Dec. 1, 2009. The tax credit only applies to homes purchased between Jan. 1, 2009 and Dec. 1, 2009.