Create a Fresh Start: Move for the New Year
Moving to Knoxville during the holiday season may not sound ideal, but if you close on a new house by December 31, you can use it towards your tax credit for that year. Local moving companies want you to be able to move into your dream home, and we want to help you. Here are some reasons why buying a home in the month of December, to move for the New Year, is a good idea.
Convenience. Practically no one looks at buying a home during December. With holiday spirits high, family coming and going, and most people having travel plans, the last thing on peoples’ minds is to go house hunting. However, if you are looking to buy a home, you may be doing yourself a disservice by not house hunting during December. If you go house hunting the week of Christmas, people tend to be in a better mood, and a giving mood; they may even come down on their price. Since very few home buyers are looking to buy during Christmas, you also have the added benefit of the lowest competition of the season, if any.
Price. Home prices are at a 12-month low in December, and like mentioned above, you could even get a nice person to lower their asking price even further.
Tax breaks. When you purchase a home, you are allowed to take the deductions during the year purchased; so even if you close a price on the last day of December, you can use it towards your tax deductions for that year. The normal allowable deductions will be the points, interest, and property taxes which you pay. A “point” is the fee that represents 1% of your loan amount. The amount of points that you pay will vary lender to lender, and are referred to as a “nonrecurring closing cost”. You will also want to assess your tax liability before you buy a home or close on a home, because all of these perks may not benefit you if itemized deductions do not come out at an amount that is more than your typical standard deductions.
Prorated interest. When choosing a closing date, it is always better to aim for the end of the month, so that you end up paying less in prorated interest. Same applies to the end of the year, if you put in an offer on a home and close on Christmas, rather than on December 1, you will only have to pay the prorated interest from Christmas through January 1, rather than the interest from the first of the month through the end of the month. Your lender will send you a 1099 form at the end of the year that will state the interest paid for the year. Make sure that the 1099 from your lender has the prorated amount, and again, this amount will be lower the closer you get to the end of the year. If you buy a home in July, you will have to pay the prorated interest from July until the end of the year, which is why December is the ideal month to close on a house.