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The Tax Implications Of Buying A House
So you just bought a home in North Carolina’s Triangle. Congratulations! You’ve got a lot to do: move your stuff, settle in, meet your neighbors. But before you get ahead of yourself, start considering some long-term plans.
The most important of those is taxes! Yes, the only certainty in life extends to your home. Thankfully it doesn’t change things too much from what you’re used to. However, there are definitely some important tax implications for your new purchase.
The most obvious new item on your list of responsibilities will be your property tax. Your home is appraised at a fixed rate based on its real market value. Like your car – the one you got a great deal on – this can be more or less than what you actually paid for it.
Here in North Carolina, tax rates are set individually by county, with significant variation. Most counties tax around .7-.8%, but cities typically have them, too. Usually the grand total equals about 1% of your house, so a bit over two grand for your average house. Rates are reassessed every few years.
You can calculate your estimated property tax here.
Federal Tax Deductions
In addition to payments, you’re actually eligible for a number of credits and deductions from your new home. Those property taxes above? Deductible. Your mortgage interest is also deductible. So are your insurance premiums, with restrictions; you adjusted gross income must be under $109k, for one.
This is especially nice for new homebuyers, since you typically pay more interest and earn less early on. This also means an extra benefit for early mortgage repayment, so long as your contract allows it.
If you drew from retirement for your down payment, you’re also in luck…sort of. First time homebuyers avoid early withdrawal penalties if it’s used specifically for a home. However, you still have to pay taxes on that money, so be ready for that.
Bought a fixer-upper in a NC historic district? Here’s something to brighten your day: those renovations are tax deductible. You can deny Uncle Sam up to 15% of your repair costs, up to a maximum of $22,500.
Are we getting ahead of ourselves? Maybe you haven’t bought a home yet! If you’re interested in exploring homes in North Carolina’s Triangle, contact Domicile Realty today! We’ll help you with the first step.
A native of New Jersey, Kristine attended Rowan University with a major in Early Childhood Education. After teaching kindergarten for one year, she discovered her passion for real estate and subsequen....
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