Guide to Tax Season for First Time Homeowners

Entering into tax season may not be the most exciting time for anyone. Sometimes, it can be a bit stressful if you don’t feel completely prepared for it, and with a new home now added into the mix—you could be wondering what else you need to know. At Gemcraft Homes, we’ve been in the new home construction industry for over 25 years, and we’ve helped countless new homeowners figure out the ropes of ownership—so we’ve put together a few things you’ll want to keep top of mind as you get ready for tax season this year.  

Set up a consultation 

There are different tax guidelines specific to each state and each county, so it’s important to first check your local guidelines before getting too deep in the weeds when it comes to your personal tax regulations. When in doubt—ask a professional. Especially for first-time homeowners, it can be incredibly beneficial to have a one-on-one consultation with a tax professional in your area. Bring all of your questions to the table and start to understand the process better for yourself. 

Take advantage of available tax deductions 

Although the original first-time credit from 2008 has expired and the First-Time Homebuyer Act of 2021 is not yet officially approved, there are still some additional programs you can look into as a new homeowner:

1. Mortgage interest deductions: This itemized deduction gives homeowners the chance to use any interest they have paid on any loan related to their home and subtract it from their taxable income. In order to claim the mortgage interest deduction this tax season, you’ll need to provide proof. The lender you worked with when purchasing your home will send you a 1098 Form—detailing how much you paid in interest on your mortgage during the past year. 

1. Property tax deductions: When you purchase your first home, the thought of paying property taxes can sometimes feel intimidating—but come tax season, you’re able to write off the payments you’ve made on both state and local property taxes when it’s time to file. Your primary home, vacation home, land, vehicles and boats can all be deducted from your taxes.

1. Home office expenses: Over the past two years, more people have moved into a remote working environment, and because of this—your expenses for home office materials might have skyrocketed. Whether you are self-employed or working fully remotely out of your home, you could be entitled to a tax deduction based on those purchases. In order to save on office expenses on your tax return, the primary use of your room must be categorized as office space and must be less than 300 square feet. 

Worry less—file early 

One of the most important things to note this tax season? Don’t wait until the last minute. Tax season doesn’t have to be a stressful time in your life, and the earlier you file—the better. 

At Gemcraft Homes, we ensure that our first-time homeowners have the tools they need to feel confident in every aspect of homeownership well after we’ve handed over the keys. If you’re ready to take the next step toward owning your first home, give us a call at (800) 291-7436 or fill out our online form today.