Tax Benefits of Home Ownership

The tax deductions you are eligible to take for mortgage interest and property taxes greatly increase the financial benefits of home ownership.  Here is an example of how it works:

Assume:

$9,877 = Mortgage interest paid ($150,000 loan for 30 years, at 7 percent, using year-5 interest)

$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)

_____

$12,577 = Total deduction

Then, multiply your total deduction by your tax rate.

For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.