We all know the old adage about nothing being certain except death and taxes. However, on a more positive note, you can also be certain of tax benefits - if you're a homeowner.
Purchasing a home can provide valuable tax savings to homebuyers. Mortgage interest, property tax, and other payments associated with financing a home can apply to your tax deductions. They may decrease the amount of income tax you must pay to the federal government.
Another financial advantage to owning a home is that as you begin to pay off your mortgage loan, you build equity in your property. In other words, the value of your home can increase as your total mortgage amount decreases over time.
For those who rent, the tax savings of ownership go to the landlord, not to the tenants. Wouldn't you rather build equity for yourself every month instead of paying someone else and giving away "your" tax savings?
Additional Advantages of Homeownership
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Scheduled Savings: When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house.
- Stable Housing Costs: While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever "cheaper" dollars.
- Increased Value: Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.
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