Home Buying in 98034>Question Details

Stephen Webb…, Home Owner in California

Tax Credit/Tax Write Off, what is the difference?Could someone provide and an example for a $300K purchase?

Asked by Stephen Webber, California Thu Mar 28, 2013

Help the community by answering this question:

Answers

3
Your question is very unclear.

In general a tax credit is dollar for dollar off your taxes. So if you have a tax credit of $1,000, and would owe $5,000 in taxes but for the credit, you would have to pay only $4,000 in taxes.

If you had a tax deduction of $1,000 and would pay $5,000 but for the deduction, how much you would have to pay would depend on your tax rate. If your marginal tax rate is 25%, that $1,000 deduction would allow you to pay only $4,750 in taxes.

So a credit is generally better than a deduction, if they are the same amount.

Neither generally applies to a purchase transaction, because a purchase is not typically a taxable event. You might get a mortgage interest deduction if you borrow to buy the property, and that would typically be a deduction.

You should consult a tax adviser for your specific situation.
1 vote Thank Flag Link Thu Mar 28, 2013
There WAS a tax credit up to $8,000 being offered to help stimulate home sales (i.e. PURCHASES) but that ended a couple years ago.
0 votes Thank Flag Link Wed May 29, 2013
Like Kary said, even though there is a difference, neither applies to a home purchase. You could be thinking about something in the past that existed or just be confused about home purchasing.

Good luck to you in any case,
Jirius Isaac
Isaac Real Estate Team
Champions Real Estate Services
TriStar Finance #MLO-107799
Office: 425-483-6849 Cell: 206-841-9976
Winner of Seattle Magazines 5 Star
Real Estate Agent Best in Client Satisfaction Award
Mortgage Loan Originator Best in Client Satisfaction
0 votes Thank Flag Link Thu Mar 28, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer