Your Home: A Powerful Tax Advantage
By Mark Felder
Afraid of the big commitment? Home ownership is always an
excellent investment offering discounts every year and guaranteed
retirement savings. It can be one of the best investments anyone
can make. Buying your principle residence is the only way you can
ensure a rent- or mortgage-free lifestyle in 15- to 30-years. So
you can retire in style. Passed down, property gives every
generation to follow a much greater advantage.
Plus, the Internal Revenue Service offers incentives on real
estate purchases to propel the American dream. Who wouldn't like
a break from Uncle Sam now and then? These write-offs and
deductions can bring your seemingly high original mortgage
payment down to lower, more comparable payments to renting. Plus,
if you get a fixed-rate mortgage loan, your payments stay the
same forever. So in ten years, when renters are paying 30 to 50
percent more in monthly payments, you'll be pocketing that
money.
Initially, the IRS gives taxpayers a break the year you purchase
your home. Keep all of your settlement records during your
purchase transaction. At year-end, you can deduct home interest,
certain real estate taxes and points representing interest as
long as you itemize. Home builders may pay these costs when
purchasing the actual land or settling the mortgage. Real estate
taxes are allocated between both homeowners that year. So you can
deduct the portion of taxes paid by you during the months of
ownership. Therefore, its most tax advantageous to purchase a
home in December or January, so you can claim the full year.
Next, the IRS gives taxpayers ongoing financial advantages. At
year-end, homeowners can deduct their interest, which is
generally the bulk of each month's payment at the outset, on
your mortgage, home equity loan or line of credit. You can also
deduct your property taxes, another large expense.
So if you still think renting beats ownership, do your math. It
might be time to reconsider.
Mark Felder, write about Real Estate for
http://www.vasrue.com