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Category:  Mortgages

Related Links:  | Home Buying Tips| Home Selling Tips | Mortgages |

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

 

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Category:  Mortgages

Related Links:  | Home Buying Tips| Home Selling Tips | Mortgages |

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