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The Tax Implications of Buying a Home

A home is the biggest purchase many of us will make in our lifetimes, and it comes with significant tax implications.As we head into spring, experts forecast home-buying activity to heat up and recommend potential buyers get their finances in order and work to get pre-approved for a mortgage before starting their hunt. But it's also important for buyers to know the tax implications and deductions of becoming a homeowner.Here's a guide of the applicable tax credits and deductions when it comes to owning a home. Keep in mind these rules only apply to a personal residence, not an investment property,  vacation home, a home office or a rental unit.Down PaymentYour down payment is not a tax deductible item. However, if you cash out a retirement plan to fund your down payment, let the plan administrator know that this is the purpose of the distribution. You can avoid the early withdrawal penalty if under age 59 1/2 if you are a first time home buyer and the funds are used for acquisition, wh...

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