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Basic Q: Condo’s, tax and tax benefits

Basic Q: Condo’s, tax and tax benefits

Old Jan 4th 2008, 11:29 pm
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Default Basic Q: Condo’s, tax and tax benefits

Thinking of buying, a couple of Q….


1/ If the taxes on a condo are stated as $2200 a year, then do you pay $220 a month in tax?

2/ regarding tax benefits of owning your own home, how does this work when its time to file your tax return?

It’s much easier in the UK!

Thanks
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Old Jan 4th 2008, 11:35 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Starbucks66 View Post
Thinking of buying, a couple of Q….


1/ If the taxes on a condo are stated as $2200 a year, then do you pay $220 a month in tax?

2/ regarding tax benefits of owning your own home, how does this work when its time to file your tax return?

It’s much easier in the UK!

Thanks

you either pay it as part of your mortgage payment or you can pay in one lump sum although state by state, county by county can vary

on your federal return you get a write off for mortgage interest and property taxes...
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Old Jan 4th 2008, 11:40 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Starbucks66 View Post
Thinking of buying, a couple of Q….


1/ If the taxes on a condo are stated as $2200 a year, then do you pay $220 a month in tax?

2/ regarding tax benefits of owning your own home, how does this work when its time to file your tax return?

It’s much easier in the UK!

Thanks
Usually your taxes are added to your monthly mortgage, at least mine are. For 2200 it would be about 183.33 (check your math). The taxes you pay on your property can be used as a deduction to push you into a lower tax bracket. That's the main benefit of property ownership.

Last edited by ugacrew; Jan 4th 2008 at 11:46 pm.
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Old Jan 4th 2008, 11:44 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Starbucks66 View Post
Thinking of buying, a couple of Q….


1/ If the taxes on a condo are stated as $2200 a year, then do you pay $220 a month in tax?

2/ regarding tax benefits of owning your own home, how does this work when its time to file your tax return?

It’s much easier in the UK!

Thanks
1/ Your math is bad!

I have a house and we pay property tax (I assume that's what you mean) as a lump sum annually to the city. That's because we don't have escrow on the mortgage.

Not sure about condos though. Perhaps this is a question you could make to mortgage providers.

2/ on my US tax return, I can deduct mortgage interest payments.
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Old Jan 5th 2008, 2:05 am
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Starbucks66 View Post
It’s much easier in the UK!

Thanks
I just noticed this comment

I would suggest its much shitter in the UK where you can't deduct either property tax or mortgage interest

Like NC penguin my old mortgage did not require escrow and I paid the lump sum. my new mortgage gave me a % discount on my interest rate if i escrowed so i did...
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Old Jan 5th 2008, 8:51 am
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Default Re: Basic Q: Condo’s, tax and tax benefits

I believe that you may be confusing the condo association fees with a tax, which they are not.

The monthly condo fee goes to covering the cost of operating the property, such as property insurance for the complex (although not for the value of the contents of your unit), building maintenance costs, common-area expenses such as pools, security and clubhouses, and reserves for future expenses. This does not include the property taxes due for your unit, which you will owe in addition to your mortgage payment, condo fees and whatever contents insurance that you may get.

For your personal residence, you can deduct mortgage interest (although not the principal payments) and property taxes, and cannot deduct insurance or maintenance costs. This IRS publication might help: http://www.irs.gov/pub/irs-pdf/p530.pdf
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Old Jan 5th 2008, 10:55 am
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Default Re: Basic Q: Condo’s, tax and tax benefits

Thanks for the replies; I see my math is not good.

It makes sense now; it appears to be better then in the UK due to the added tax relief!
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Old Jan 5th 2008, 1:17 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by RoadWarriorFromLP View Post
I believe that you may be confusing the condo association fees with a tax, which they are not.

The monthly condo fee goes to covering the cost of operating the property, such as property insurance for the complex (although not for the value of the contents of your unit), building maintenance costs, common-area expenses such as pools, security and clubhouses, and reserves for future expenses. This does not include the property taxes due for your unit, which you will owe in addition to your mortgage payment, condo fees and whatever contents insurance that you may get.

For your personal residence, you can deduct mortgage interest (although not the principal payments) and property taxes, and cannot deduct insurance or maintenance costs. This IRS publication might help: http://www.irs.gov/pub/irs-pdf/p530.pdf
Where did the confusion about HOA's or Condo fees become an issue? Just looking...
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Old Jan 5th 2008, 4:13 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Double check everything with your lender so you get a clear understanding.

Commonly your mortgage payment will consist of P.I.T.I - Principle, Interest, Tax and Insurance. The reason why lenders bundle in the taxes is really to secure their position on the property, as taxes (whether property, fed, state etc) are more senior than the lender's interest on the property, so they want to ensure no one is in front of them per se and remain in first position. The insurance is a given because they want to ensure the property is protected. Basically, they pay the premium and taxes and you are reimbursing them back over the span of the year. Overall, people see it as a convenance. Outside of this, they may collect upfront 3,6 months worth of reserves in escrow (i.e. prepaids and reserves in your closing costs) which you should get back when you sell.

Sometimes lenders give the option of not collecting for taxes with your mortgage payment so the burden of the total taxes to be paid falls on your shoulder; some lenders will charge you for this - so double check with them if thats the case and in what form will they charge!! Yeah, its stupid that they charge you not to have the escrows/reserves; but the risk of a tax lien increases for them.

If you are considering a condo/twnhome with an HOA and dues etc... and the dues consist of some form of insurance... double check what their policy is too. You can find out who the insurance agent is for the association and give them a call. Typically, its the theme of "Walls In, Walls Out" i.e. exterior is typically covered by the HOA (but never assume anything). Run the scenario of if a pipe were to burst in the wall, whose insurance kicks in? Don't just settle on content insurance or something like "renter's insurance" though because it may not cover certain things under certain conditions (like a pipe burst). Talk to your insurance agent regarding the types of policies available.

Many have answered your question(s); property taxes and the annual interest portion of the mortgage is deductable on your tax return.
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Old Jan 5th 2008, 10:18 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by ugacrew View Post
Where did the confusion about HOA's or Condo fees become an issue? Just looking...
Just a guess. The HOA fee is often quoted in ads for condos; projected property taxes, not as often. I'm assuming that the OP isn't familiar with US formalities and may not be aware that association fees are the norm for these properties, but again, that's just a guess.
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Old Jan 6th 2008, 2:00 am
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by BritGuyTN View Post
I just noticed this comment

I would suggest its much shitter in the UK where you can't deduct either property tax or mortgage interest

Like NC penguin my old mortgage did not require escrow and I paid the lump sum. my new mortgage gave me a % discount on my interest rate if i escrowed so i did...
Definately is much shittier in the UK, the tax relief on interest and tax here is great.

I pay my property tax lump sum at the end of the year - if you can afford to do so, and unless there is an incentive not to do so like BritGuy here, you are better off having the money in your account earning you interest all year rather than handing it over month by month (sometimes at a premium I belive?) to a company who will earn off it.
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Old Jan 6th 2008, 2:42 am
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Dan725 View Post
Definately is much shittier in the UK, the tax relief on interest and tax here is great.

I pay my property tax lump sum at the end of the year - if you can afford to do so, and unless there is an incentive not to do so like BritGuy here, you are better off having the money in your account earning you interest all year rather than handing it over month by month (sometimes at a premium I belive?) to a company who will earn off it.
OR you could do what I did an purchase a property that has tax abatement. Usually that kind of property is deemed 'historic' in nature and is usually a warehouse converted into a condo/loft. I have little or no property taxes because of that. Mine would be over 2K if the abatement was not there. The only thing I have to pay is the tax on my vehicle associated with the parcel (condo).
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Old Jan 6th 2008, 1:38 pm
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Default Re: Basic Q: Condo’s, tax and tax benefits

Originally Posted by Starbucks66 View Post
Thanks for the replies; I see my math is not good.


IT'S MATHS!!!! All of you - jeez
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