If you're shopping for a home, it pays to do some tax calculations before you start touring subdivisions. Taxes can be a pivotal factor in many of the decisions you'll need to make in buying a home. How much home you can afford to buy may well depend on how much you can count on the tax system to subsidize your monthly payments.
Homes remain one of the most lucrative tax shelters left in the tax code.
But many people overestimate the value of those benefits. The tax code doesn't provide much help in financing the considerable up-front expense of purchasing a home. Most closing costs including attorney fees, transfer taxes, title insurance and surveys aren't deductible. Up until 1994, a limited amount of closing costs could be written off as a job-related moving expense. But under the 1993 tax law, costs incurred in selling your old home or buying a new one are no longer eligible for the moving deduction.