Tax Benefits of Homeownership

 

The tax deductions you can take for mortgage interest and property taxes greatly increase the financial benefits of home ownership. 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

$3,521.56 = Amount you have lowered your federal income tax (at 28-percent tax rate)

(12,577 X .28 = $3,521.56)

Note that mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.