Tax Advantages Of Home Ownership

Never purchase a home because your mortgage interest rate is a tax deduction. Remember, you will only save on fees and expenses that you wouldn't have had to pay if you were still renting.

The government wants to give you incentives to own your own home so they have built into the income tax system several deductions specifically for homeowners.

Note: Do not confuse a tax deduction with a tax credit.

Tax Credit: An amount by which tax owed is reduced directly. It is not dependent on your tax bracket.

Tax Deduction: An amount, most often for a personal or business expense that reduces the amount of your income that is subject to tax. Further, it reduces your taxes proportionately to the percentage fixed for your individual income bracket.

State Property Taxes: Your state property taxes are also deductible at the federal level. If you choose to consolidate your other consumer debt, credit cards in particular, by using a HELOC, home equity line of credit, you can then deduct the interest from your taxes. So you can pay off those other debts, which are not deductible, to a lower interest rate and deduct all the interest paid on your tax return.

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