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SuperNet9
Go Ninja,Go Ninja Go..
Premium
join:2002-10-08
Schaumburg, IL
kudos:5

Income Tax question

My sister bought a house on 7/2012... Interest this year is about $2,300.00 on her mortgage for 2012 and then another statement from a different company for $400.00 interest on 4000 points and then something about $3,300 pmi..(i guess 1st company sold the mortgage)

Should she do standard deduction or do itemized..
she is Single
I am guessing itemized?

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
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You do not provide enough information to answer the question. Did she pay state income taxes? Property taxes? Gifts to charity? Medical expenses in excess of 7.5% of her income? Unreimbursed employee expenses? Union Dues?

Since you have to ask the question in the first place, you should probably call 1-800-TAX-1040 and get the proper answer.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
reply to SuperNet9
She needs to talk to a tax professional. 4000 points would be a HUGE sum of money unless the house cost was a few dollars...
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain

HarryH3
Premium
join:2005-02-21
kudos:3
reply to SuperNet9
Spend $30 on some income tax software. Enter the numbers and then the software will tell you which method results in your sister paying the least amount of income tax. Easy.

charlesDean

join:2013-02-14
Westland, MI

1 recommendation

reply to SuperNet9

computer setup

Hello Friend,
You have to spend $30 on some income tax software. Enter the numbers and then the software will tell you which method results in your sister paying the least amount of income tax.

charlesdean


tschmidt
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join:2000-11-12
Milford, NH
kudos:9
Reviews:
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reply to SuperNet9

Re: Income Tax question

That is an easy question - plug in all the itemized deductions and if it exceeds the standard deduction itemize. With state income and mortgage more then likely it will make sense to itemize, don't overlook other deductible expenses if you decide to itemize.

As has been posted if you are using tax software plug the expenses in it will quickly tell you which way is better.

/tom

trudy

join:2013-02-15
reply to SuperNet9
I don't know what all of the items you mention mean in terms of interest paid, but it is fairly simple to figure out what she should do.

(I am not a tax professional, so this is just my ramblings as a layperson who does her income tax forms by hand).

Take a look at federal Schedule A and see what her total deductions will be:

Include Medical (prescriptions, doctors' fees not reimbursed by insurance, medical and dental insurance premium payments, dentists' bills not reimbursed by insurance, eyeglasses, etc. mileage to doctors' appointments if that's worth tracking.

Also there is a section for local taxes where she can put her property taxes ("real estate taxes"). Also local income tax payments go in there if my memory serves me correctly.

Also charitable deductions - check the instructions for charitable as they, like Medical, are limited by comparison to income although it does not say that on Sched. A itself.

Then compare to the standard deduction.

Update: I looked up pmi and it seems to be "private mortgage insurance"? I googled and there are some cases in which that is deductable on Sched A, so check that out. Also, she should make sure she gets that discontinued once she reaches enough equity.

I have to say I'm stunned that private mortgage insurance costs that much.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
It should not be that much - when I had it, it was less than $100/month. Can't begin to imagine the price for that insurance has gone up that much...
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain


powerage66
Premium
join:2004-01-06
Seminole, FL
reply to SuperNet9
Your sister would need to have more deductions to itemize, it looks like she is a little short of the standard deduction of $5,950. Real estate taxes she paid would be more than enough to itemize.


drew
Radiant
Premium
join:2002-07-10
Port Orchard, WA
kudos:6

1 recommendation

reply to CylonRed
On a $200k+ note, I'm paying $116/mo for PMI.

And pardon my language, but PMI is fucking bullshit.

Crypto_Bug

join:2001-05-31
Torrington, CT
Why is PMI b*llsh*t? If you have enough to put down then you don't need PMI. It is a personal choice you make when purchasing a home.
--
Certs: CCNA, GPEN, GCIH, GCFW, GSEC, GCIA, GCFA, GCWN


Badger3k
We Don't Need No Stinkin Badgers
Premium
join:2001-09-27
Franklin, OH
reply to drew
said by drew:

On a $200k+ note, I'm paying $116/mo for PMI.

And pardon my language, but PMI is fucking bullshit.

After 5 years or when you get 78% LTV you should be able to request to have it removed. I think on loans after 2000 (or some date and year) the banks are supposed to automatically remove it on reaching the LTV. Hard to do now that home values are still shit.
--
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drew
Radiant
Premium
join:2002-07-10
Port Orchard, WA
kudos:6
5 years relies upon valuation.

»www.mtgprofessor.com/a%20-%20pmi···(ii).htm

PMI is a racket for the banks. I purchased in 2007. PMI will be gone... in a long, long time.
--
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Bob4
Account deleted

join:2012-07-22
New Jersey
That's what you get for buying more than you can afford.

H_T_R_N
Premium
join:2011-12-06
Valencia, PA
kudos:1
Reviews:
·voip.ms
said by Bob4:

That's what you get for buying more than you can afford.

I was going to say the same thing. PMI is so the banks\lending institution can cover the loss when the buyer realizes in a year or so that he can't afford the house he talked himself into.

Bob4
Account deleted

join:2012-07-22
New Jersey
Always put at least 20% down in cash. If you can't do that, you really can't afford to buy the property.

When I bought my house, loan-to-value ratio was 70%. Now it's 25%.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
reply to H_T_R_N
said by H_T_R_N:

said by Bob4:

That's what you get for buying more than you can afford.

I was going to say the same thing. PMI is so the banks\lending institution can cover the loss when the buyer realizes in a year or so that he can't afford the house he talked himself into.

We did not have 20% but we could easily afford the house - had PMI for about 2.5 years so the above is not necessarily true.
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain


hitachi369
Embrace Your Rights
Premium
join:2001-10-03
Grand Rapids, MI
kudos:4
reply to CylonRed
said by CylonRed:

It should not be that much - when I had it, it was less than $100/month. Can't begin to imagine the price for that insurance has gone up that much...

I work for a bank, 100$ isn't a lot for PMI. I saw an account earlier this week they were paying 261$ in PMI each month.

PMI is a rip off, @ drew See Profile as long as you dont have a FHA loan you can cancel before before 5 years or 78% LTV. My bank only requires LTV less than 80%, depending on how close you are to the target LTV you could also have your house appraised and maybe bump high enough. I'm sure your bank would be similar.
--
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drew
Radiant
Premium
join:2002-07-10
Port Orchard, WA
kudos:6
I bought at 250k. Valuation is under 170k.


SuperNet9
Go Ninja,Go Ninja Go..
Premium
join:2002-10-08
Schaumburg, IL
kudos:5
reply to SuperNet9
How can someone get a Valuation on the house?
--
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hitachi369
Embrace Your Rights
Premium
join:2001-10-03
Grand Rapids, MI
kudos:4
reply to drew
Bummer, they likely wouldn't force another appraisal (mine wouldn't atleast), have you paid down more than 20% from your original appraisal?


drew
Radiant
Premium
join:2002-07-10
Port Orchard, WA
kudos:6
No, not even close. We also refinanced in Jan 2012 to get a significantly better rate. Had we been anywhere near close to losing PMI, I would not have refinanced.
--
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Warzau
Premium
join:2000-10-26
Naperville, IL
kudos:1
reply to Badger3k
I think by law the company has to remove it @ 78%.


hitachi369
Embrace Your Rights
Premium
join:2001-10-03
Grand Rapids, MI
kudos:4

1 recommendation

78% and 5 years for a FHA. Some government loans require PMI for the entire loan. The truth and lending will tell you when/if it will be removed automatically from your loan, unless it is an ARM.


AVD
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Premium
join:2003-02-06
Onion, NJ
kudos:1
reply to Bob4
said by Bob4:

When I bought my house, loan-to-value ratio was 70%. Now it's 25%.

When I bought my house, the LTV was exactly 80%. Now its about 105%
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Warzau
Premium
join:2000-10-26
Naperville, IL
kudos:1
reply to hitachi369
ahhh!


AVD
Respice, Adspice, Prospice
Premium
join:2003-02-06
Onion, NJ
kudos:1
reply to hitachi369
My refi has the pmi built into the loan.

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
reply to AVD
said by AVD:

said by Bob4:

When I bought my house, loan-to-value ratio was 70%. Now it's 25%.

When I bought my house, the LTV was exactly 80%. Now its about 105%

Onion isn't what it used to be. (I lived there from 1962 to 1981.)

H_T_R_N
Premium
join:2011-12-06
Valencia, PA
kudos:1
Reviews:
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reply to CylonRed
said by CylonRed:

said by H_T_R_N:

said by Bob4:

That's what you get for buying more than you can afford.

I was going to say the same thing. PMI is so the banks\lending institution can cover the loss when the buyer realizes in a year or so that he can't afford the house he talked himself into.

We did not have 20% but we could easily afford the house - had PMI for about 2.5 years so the above is not necessarily true.

You could afford to throw money away on PMI but couldn't save enough to put a proper DP down. OK.. You wouldn't be looking to buy a bridge would you?

H_T_R_N
Premium
join:2011-12-06
Valencia, PA
kudos:1
Reviews:
·voip.ms
reply to AVD
said by AVD:

said by Bob4:

When I bought my house, loan-to-value ratio was 70%. Now it's 25%.

When I bought my house, the LTV was exactly 80%. Now its about 105%

OUCH!! Bought at 75% 10 years ago, 4 more years and it will be 0.0%