Tax Benefits of Owning a Home
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The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works.
Assume:
$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______
$12,577 = Total deduction
Then, multiply your total deduction by your tax rate.
For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56
$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)
It’s never been a better time to purchase a home. Low home prices and low interest rates. At Realty World-Davis Homes & Properties we specialize in making the dream of owning a home become a reality. If you’ve got any questions, we’ll have the answers.
With only weeks left to get your new purchase under contract before the deadline of the $8,000 and $6,500 tax credits end, time is of the essence.
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In addition State taxes income are lowered as well by the mortgage insterest deduction. This increases your opoortunity to reduce taxes. The state income tax rate can he as high as 9.6%.
You’re absolutely correct, Peter. Thank you for mentioning that great point. That’s why you’re the only CPA that I recommend people to.