Closing on new home construction - end of year or begin of next year?

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pdanet
Posts: 43
Joined: Wed Feb 08, 2017 3:29 pm

Closing on new home construction - end of year or begin of next year?

Post by pdanet » Sun May 21, 2017 9:14 pm

We currently are building our new home and according to the builder, we may close late in Dec or early Jan next year.

Builder is a nationally well known builder and they are offering in-house mortgage so they are paying some part of the closing costs if we choose them as the lender and we are leaning towards them.

Any thoughts on if it's better to close in Dec(2017) or Jan(2018)?

btenny
Posts: 4471
Joined: Sun Oct 07, 2007 6:47 pm

Re: Closing on new home construction - end of year or begin of next year?

Post by btenny » Sun May 21, 2017 9:42 pm

The points and the origination fees are tax deductable. So if you close this December you can take those off taxes for this year. Then take the payments for the mortgage off next year. Or wait until Jan and take both next tax year. The gotcha is if you rush for December the builder may try to get gotchas approved before they are fixed in order to find the mortgage.

Good Luck

Saving$
Posts: 1594
Joined: Sat Nov 05, 2011 8:33 pm

Re: Closing on new home construction - end of year or begin of next year?

Post by Saving$ » Sun May 21, 2017 11:06 pm

In my area, property taxes are based on the value of the property on Jan 1. If the property receives a certificate of occupancy in December, it will be assessed at it's full completed value on Jan 1. However, if it does not yet have a certificate of occupancy on Jan 1, it's value is the value for that tax year is the value of the land only.

Since you are buying from the builder, property taxes will be prorated at closing, so you will only pay for the time you own the property. But if your 2018 property taxes have the possibility of being significantly lower, you may wish to delay the closing into January, and the strategy will only work if the builder also delays obtaining a certificate of occupancy until after January 1.

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