How much do you pay for a house?
Posted On June 16, 2021
The cost of a home is the sum of the buyer’s down payment and down payment plus any mortgage payments and other costs that go along with the sale.
For example, if a home buyer pays $1.5 million in cash for a 10,000-square-foot house, the buyer pays 20% down, 20% mortgage interest and the rest goes to the seller.
But in some cases, it can be more complicated to determine how much the buyer should pay for the home.
The home’s buyer’s equity isn’t always the same.
If a home has an equity of $1,000,000 or less, the seller may be able to deduct all of the cost of the home, but if it has an amount that exceeds that amount, the home will need to be sold, and the buyer will need more cash for the sale to be eligible for the mortgage.
In some cases the buyer can also deduct any payments on the home or any other costs.
For example, the value of a house may be worth less than the $1 million that the buyer paid for it, or it may be a bit more than $1 mil, depending on the value at auction.
But if the home’s worth is less than $300,000 (which would mean it’s worth less in the eyes of the IRS), the buyer still has to pay $100,000.
If the home is worth more than that amount but less than its appraised value, the owner may have to pay the buyer a small premium to get the buyer to make the sale worth the buyer $300k.
For more information on the mortgage interest deduction, see the article Mortgage Interest Deduction: Is It Worth It?
If a home seller wants to deduct the buyer costs from the sale price, the property must have been sold before April 15, 2018.
If the property was sold before that date, the purchase price and down payments are deductible, and no home buyer fees are required.
However, if the property sold before May 1, 2018, the sale is not taxable.
The property must be in the U.S. taxable before the first $1 billion worth of taxes and fees is paid.
If you paid any tax or fees on the property before that point, you don’t need to pay any additional taxes and don’t have to file any tax returns to file for the tax year.
For other questions, see How Much Does the Home Cost?
Source: Recode, ABC News