Most renters take a standard deduction, because without mortgage interest they don't have enough deductions to itemize. With a mortgage interest deduction, you can take full advantage of your other deductions such as employee business expense, state income tax, motor vehicle tax and charitable contributions.
All yearly interest is tax deductible. Including any points paid for financing.
You can deduct the total amount of your yearly property tax bill.
In addition to tax advantages you can greatly benefit from your home's appreciation. A general rule of thumb is about 4 - 5% per year on average. If you bought a home that is worth $100,000 then at the end of one years time it could be worth:
1st year = $105,000
2nd year = $110,250
3rd year = $115,762
and so on...
You can also use your homes equity to your advantage by consolidating debt, purchasing big ticket items with a 2nd mortgage or HELOC at comparable interest rates, lower payments and you are able to deduct the interest from these mortgages as long as the loans do not exceed 100% of your homes value.
Home values have sustained growth through the years. Historically there has been no better financial investment than home ownership. It is the best hedge against inflation because real estate is the world's only commodity in absoulutely limited supply. Population growth steadily increases demand, thus the increasing value of real estate over time has been constant.
In addition to paid interests and real estate tax being tax deductable, most of the settlement costs are also deductable. For purchase transactions, settlement charges are deductable in the year the transactions occur. For refinances, closing costs are deductable throughout the life of the loans. As always, consult a certified tax accountant before taking any such deductions.
The tax advantages of renting - NONE! Don't pay someone else's mortgage payment for them every month. Contact your trusted local mortgage consultant and get prequalified for a home loan today.
Please keep in mind though, because of the complexity of tax laws, you must always consult your individual tax advisor for the precise tax advantages of your home and it's mortgage. Mortgage professionals can give you general guidelines but things can vary from homeowner to homeowner.
