Home Ownership Tax Savings
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~ HOME OWNERSHIP TAX SAVINGS ~
Home Buyers Real Estate Learning Center
Home Ownership Tax Savings:
Owning a home means a significant income tax break
You are making mortgage payments right now.
The difference is that you're making your landlord's mortgage payment
When you purchase a home the interest on your mortgage and the real estate taxes due on your property are both tax deductible. Consider this example: On a $100,000 mortgage with an 8% interest rate, you pay $8,000 in interest your first year. If this property has real estate taxes of $1,000 each year, you make a total of $9,000 worth of tax-deductible payments. If you income is $40,000, without a home, you pay taxes on $40,000. Now that you own a home, that $9,000 of tax-deductible payments will be deducted and you'll only pay taxes on $31,000. If you are in the 25% tax bracket, you'll receive a tax rebate of $2,250 (25% of $9,000) at the end of the year!
However, you don't have to wait. When you started your current job you filled out a W-4 form. This form determines the withholding allowances that you're going to claim on your income. You never had a reason to complete the back of that form. Now that you own a home you have a very good reason. By claiming the legitimate withholding allowances you receive from home ownership, in the example above, you will receive approximately $187 more per month in take home pay instead of having to wait until the end of the year courtesy of your new home.
REMEMBER you are paying interest and Real Estate
taxes right now--- they're just not yours, they're your landlords. Your
landlord is receiving these benefits....
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