“The politicians say “we" can't afford a tax cut. Maybe we can't afford the politicians. ” -Steve Forbes
There are many reasons why owning a house is a good thing. Not only does it add to the emotional and physically security of your family it also has a number of financial perks you can find no where else in the market. For example, mortgage and real estate taxes are both deductible each year when you file taxes.
Anyone who has a mortgage can utilize this tax deduction. If you have a mortgage and would like to use your interest as a deduction contact a financial or tax advisor who can help you learn about the rewards, disadvantages, and the ‘how to’ of filing your taxes correctly. The tax benefits from owning a home can be achieved in two ways.
Either you can wait to use the interest deduction at tax time or you can actually use the deduction to reduce the amount of taxes taken out of your pay check each year.
In the first years of home ownership, the majority of the monthly payment is applied to paying down interest. That is why the first years are so lucrative in terms of tax deductions. As you pay down your interest on a mortgage, each time you pay more and more on principal which then reduces the amount of interest you are actually paying. Therefore, your tax deduction will slowly decrease over time.
Home ownership is similar to a savings account. Each month you place money into your home in the form of mortgage. This money accumulates and your house appreciates in value. Then when you are ready to sell you can make a huge profit.
Or if you need the money you can take out a home equity loan which will allow you take the money out of your ‘savings’ account and use it for something else. Owning a home is the American dream and a giant step on your path to financial freedom.
There are three parts of your home mortgage offer a tax benefit including the interest you pay on your mortgage, your local property taxes, and any loan points. However, there are several parts of home ownership and home improvements which are not tax deductible.
These include any expenses that have to do with home improvement because you already benefiting from an increase in home value. Insurance, loan fees, inspections, commissions paid to banked, loan officers, or real estate agents are not tax deductible.
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