Posts Tagged ‘mortgage interest’

Tax Advantages of Having a Mortgage

We all hate paying taxes, but unfortunately it’s a necessary evil of our society. In order for state and local goverments to function properly our tax money is needed. I’m not sure they really need as much as they take, but that’s another debate and another blog. Paying taxes obviously isn’t fun so you need to take advantage of any way you can to reduce your tax bill.

One way to reduce your tax obligation is to claim the interest on  your home mortgage. Peak Personal Finance gives a great, breif explination of the tax advantage of having a mortgage. Not only can you deduct your monthly interest paid on  your home mortgage but you can also deduct points paid at closing.

If you are having trouble deciding if you should buy or rent a home you may want to consider all the advantages of owining your own home and give Peak Personal Finance a quick visit and learn more about the tax advantages of having a mortgage.

Tax deductions from mortgage interest

Every year millions of Americans buy a home for different reasons. Home ownership creates a sense of accomplishment and pride. The IRS also offers another benefit of buying a house. Home owners can deduct the interest paid and points paid on the home mortgage each year from their income, in return reducing their tax bill at the end of the year.

Every payment you make on your home mortgage reduces the amount of interest you pay and increases the amount of principal you pay. So each year the deduction gets a little smaller but it’s still WELL worth the deduction. According to the IRS all interest you pay toward your home is tax deductible up to 1 million dollars.

You also get to deduct any points you pay toward closing of a home loan. Sometimes home buyers pay a fee at closing called points. This is basically paying a percentage of the home loan up front in order to get a lower interest rate. These fees are fully tax deductable when you file your taxes. You may also include points paid toward a refinance and home equity loans.

If you are thinking about buying a home now is a great time to invest. Interest rates are very low and the values of homes have greatly decreased. You will also enjoy a great tax break from the government over the life of your loan.