Buying a house provides serious tax shelter advantages. Expenses related to home ownership can be tax deductible. An additional advantage to owning a home is the tax-free sale. The next benefit you can enjoy is the ability to borrow tax-free against home equity without having to sell your house. Home ownership should be a priority of every personal financial plan.
Before ending this article, focus on one other additional factor. When getting any type of mortgage for buying a house or refinancing, you must inquire if the home loan is going to have a pre-payment penalty.
A pre-payment penalty is a stipulation by the lender that does not allow you to repay the mortgage prior to a certain date without penalty. It usually lasts from one to three years. Whether or not you accept a pre-payment penalty as part of the terms of your mortgage may or may not be important to you. However it is important that you are aware of it especially if you have plans to pay the loan off early.
See you tomorrow with a new series.
Kate, your mortgage translator on a crusade helping homeowners consider how much they can afford in a mortgage.
Regarding tax implications, it is always recommended that you consult a qualified financial adviser.
P.S. To read my article in full, visit Free Real Estate And Mortgage Articles
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Kate, as a licensed CPA and Real Estate Broker, I take issue to anyone using the term "tax shelter" to describe a residential ownership situation. Although I am sure that you merely selected the wrong words, it is not appropriate none the less.
Also, the IRC has specific requirements for a "tax free sale of the home". This should not be taken for granted. The taxable gain on the sale of a primary residence may be limited based on the amount of the gain and if certain residency/occupancy tests are met. However, to make a blanket statement about "tax free sale" is irresponsible, in my opinion.