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| Tips For Home Buyers: Tax Savings |
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Because of income tax deductions,
the government is subsidizing your purchase of a home. All of the
interest and property taxes you pay in a given year can be deducted
from your gross income to reduce your taxable income.
For example, assume your initial loan balance is $150,000 with an
interest rate of eight percent. During the first year you would
pay $9969.27 in interest. If your first payment is January 1st,
your taxable income would be almost $10,000 less – due to the IRS
interest rate deduction.
Property taxes are deductible, too. Whatever property taxes you
pay in a given year may also be deducted from your gross income,
lowering your tax obligation.
When you rent a place to live, you can certainly expect your rent
to increase each year – or even more often. If you get a
fixed rate mortgage when
you buy a home, you have the same monthly payment amount for thirty
years. Even if you get an
adjustable rate mortgage, your payment
will stay within a certain range for the entire life of the mortgage
– and interest rates aren’t as volatile now as they were in the
late seventies and early eighties.
Imagine how much rent might be ten, fifteen, or even thirty years
from now? Which makes more sense?
Some people are just lousy at saving money, and a house is an automatic
savings account. You accumulate savings in two ways. Every month,
a portion of your payment goes toward the
principal. Admittedly,
in the early years of the
mortgage, this is not much. Over time,
however, it accelerates.
Second, your home appreciates. Average appreciation on a home is
approximately five percent, though it will vary from year to year,
and in some years may even depreciate.. Over time, history has shown
that owning a home is one of the very best financial investments.
Excerpt from story by Terry Light.
Home -
Up -
Your Best Investment - Buying
an Automobile - Changing Jobs
- The Closing Date
Earnest Money Deposit -
Home Buyer Tips -
Home Inspection -
Market Condition
Moving Money Around -
Your Offering Price -
Property Condition -
Seller Disclosures &
Disclaimers
Settlement Service Providers
- Income Tax Savings -
Writing Offers
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