How did you lose this downpayment?
IN a typical home closing, the borrower can write off the portion of closing costs even NOT paid out-of-pocket. For example, he can deduct all seller-paid closing costs that covered his deductible items, including pre-paid mortgage interest, insurance and taxes. A seller may also pay points, which are deductible. ... A downpayment, however, is only tax deductible if the funds came from a deductible source, like another home loan refinance, or a second mortgage or home equity line of credit on another property. This down payment ... that comes from these sources is deducted for the same year the mortgage interest is paid. ... But help me understand what you mean by lost Are you talking about earnest money?
Interest rates went up and I could not afford the home but the builder clause stated after 5 days they could keep down payment.
I'm so sorry - but If this was to purchase a personal residence any forfeited down payments, earnest money or deposits are nondeductible. For additional information please see IRS Publication 530, Tax Information for First-Time Homeowners. You can view or download publicatons at www.irs.gov or order a free copy by calling(NNN) NNN-NNNN
Yes I believe it is considered earnest money. As I stated before I withdrew it from my IRA to put down on the home.
The IRA piece is really a separate issue, but again the downpayment, lost, itself is not deductible
Was this a first time home purchase?
Said better, did you or your wife, if married, not own a principal residence at any time during the previous two years?
I still don't see you coming back into the chat .... SO I'll add this and then move us to the "Q&A" mode. ... Maybe that will help
You can use up to $10,000 in IRA funds toward the purchase of your first home. If you're married, and you and your spouse are both first-time buyers, you each can pull from retirement accounts, giving you $20,000 in residential cash, without the 10% penalty.
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