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| The Tax Advantages of Buying a Home: Mortgage Center |
You've heard again and again how buying a home is the best tax
break around. Maybe you've even been called a chump for renting.
After all, paying $1,200 a month for your mortgage is really the
equivalent of paying $900 a month in rent. But how does that
work exactly?
Here's the deal: Mortgage interest (including |
| points) and real
estate taxes are tax deductible. That doesn't sound very sexy,
but it adds up. Since most of what you pay for your mortgage in
the first years is interest, on a $1,200 mortgage payment you
get to deduct about $1,080 a month. That reduces your taxable
income by about $13,000 a year. If you're in the 28% |
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tax
bracket, that deduction is worth about $300 a month.
To see the benefit, you can either wait for a big payout after
you file your income-tax return, or adjust what is withheld from
your paycheck each month. Claim additional allowances on your
W-4 form and your paycheck will jump immediately. You'll have |
to
do the worksheet on the back of the W-4 form to figure out how
many additional allowances you can claim. But using the above
example, you could take two or three more.
If you want to learn more about this go to :Clear-a-debt.com
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