The tax benefits of homeownership

As a Real Estate Broker, I am not qualified to give tax advice.  What I can do is pass on this interesting article from Inman News.  Always be sure to consult your own tax advisor regarding tax-related real estate questions:

When it comes to the tax benefits of renting vs. buying, the benefits of buying are many, while there are few or no tax benefits for renting. This simple fact can help get renters motivated to take the plunge into homeownership.

The tax benefits of buying a home include:

Home mortgage interest deduction: The interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home is deductible as an itemized deduction. In the early years of a home loan most of the payments consist of interest, so this deduction is particularly substantial during the first years of homeownership.

Depending on the state a buyer lives in and his or her tax bracket, this deduction can reduce the cost of borrowing by one-third or more.

Home equity loan deduction: Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction. The money can be used for any purpose, such as paying off high-interest credit card debt. In contract, the interest on credit card debt is not deductible.

Property tax deduction: Homeowners also get to deduct from their federal income taxes the state and local property taxes they pay on their home. This is another itemized deduction that renters don’t get.

The rest of the story: http://lowes.inman.com/inmaninf/lowes/news/136175

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