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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: 1st time homebuyer - AMT? Date: 5/3/2011 10:35 AM
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This last year, DH and I got married and filed jointly and for the 1st time paid a very minimal amount of AMT ($9). I was surprised by that because we don't have any deductions outside of state taxes (CA).

That, in itself, is not shocking. The adjustment for state and local taxes is the biggest single reason people pay AMT. And California is a prime location for AMT payers. It's a little unusual in that you're not yet paying property taxes. So when you do buy the home, it's more likely that you will pay more AMT, and thus will not benefit from the property tax deduction. Now for this year, your regular tax and AMT were very close - only a $9 difference - so you did benefit from almost all the state & local income tax deduction.

Both of us have recently received raises so our income will be definitely higher in 2011.

So both your regular tax and AMT will be higher; whether you pay more AMT just from that depends on your regular tax rate more than anything (along with the fact that your state withholding will be higher.)

Does that mean that when we do purchase a home that we likely won't get any of the mortgage interest deductions that others get?

No, not at all. Qualified mortgage interest (on debt used to build, buy, or improve a home, up to $1 mill.) is deductible for both regular tax and AMT. Home equity debt up to $100K is deductible for regular tax only.

Bill
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