Wednesday, May 6, 2015

Buying VS Renting: Which Type Of Financial Benefits Do Homebuyers Get That Renters Don't? Part 1.

Mortgage Interest Deduction

Do you know the mortgage interest deduction lets homeowners deduct the interest on their home mortgage up to $1 million ($500,000 if you’re married filing separately)?

In fact, because a greater share of the house payment during the first few years of the loan goes toward interest, roughly two-thirds of the monthly mortgage payment is deductible interest.

That can translate to a hefty tax deduction! 

For example, a $200,000, 30-year fixed-rate mortgage at 4% will result in $8,000 interest the first year you own your home. Deducting that interest will save you $2,000 if you’re in a 25% income tax bracket ($8,000 x 0.25 = $2,000) and even more if you are in the 15% bracket.

In addition to the mortgage interest deduction, homeowners (and landlords) take advantage of other deductions that renters don't.  The landlord and apartment complex owner gets all the tax benefits associated with property ownership while the renter typically pays the cost.

Buying VS Renting: Upcoming Articles

PT. 2 Property Tax Deduction.

Pt. 3. Points Deduction.

Pt. 4. Mortgage Insurance Deduction.

Pt. 5. Going "Green" Deduction.

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