A stunning revelation of the advantages of home ownership was published by Robert D. Dietz, Ph.D. in an article he published March 27th entitled The Tax Benefits of Home ownership.
Dr. Dietz ran the numbers and discovered that, "a household with $80,000 in annual income who obtains $200,000 mortgage will save on average $1,765 in the first year of home ownership. By the end of the fifth year of homeownership, the household will save on average $8,607 on taxes, and this amount grows to $19,488 by the end of the average period of ownership - twelve years. This stylized homeowner can expect to save $21,650 in capital gains taxation, yielding a total benefit of $41,138 over the expected period of homeownership."
He also "provides variants of these calculations if the analysis allows the homeowner's income to increase with their age and labor market experience. For example, the five-year taxx savings for this homeowner increases to $9,723."
His findings go on to calculate, "how the numbers are increased by the existence of the temporary $8,000 first-time homebuyer tax credit. In the case illustrated above, the five year tax savings estimate increases 82% from $9,723 to $17,723."
The tax advantages for home owners are staggering. The deductibility of mortgage interest, deductibility of real estate taxes and capital gains exclusions for principle residences create unreal tax savings. Homes are and will continue to be a strong vehicle for helping us create wealth in our lives.
This paper has been made courtesy of www.HousingEconomics.com
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