In most cases, rent for your personal residence is NOT tax deductible, but home mortgage interest is! If you are renting, you’re throwing your money out the window.
In addition, you can usually find a house to own by borrowing the money (called a mortgage). If you stay within reason, you can typically find a nice house in a nice area to buy, and your mortgage payment will be approximately the same amount as you were paying in rent.
The difference, however, is that you are now working towards home ownership…the American Dream! With the added benefit of tax deductible interest from your home mortgage!!
With your mortgage payment (instead of rent payment), you are making monthly principal and interest payments on your mortgage loan each and every month. If you itemize your deductions, the interest portion is usually 100% tax deductible on your income tax return, and the principal amount pays down your mortgage loan balance.
Therefore, when you deduct your home mortgage interest on your tax return each year, your income tax liability will go down, thus resulting in either a higher refund or a lesser amount owed on your tax return...hence...TAX RELIEF!
Most mortgages are 30 year loans, so after 30 years, you will own your home completely, free and clear of your mortgage loan.
Let me be clear, I don’t advocate having a mortgage simply to get a tax deduction. However, buying a house and paying a mortgage payment almost always puts you in a better tax situation than paying rent.
Furthermore, in addition to usually being tax deductible, the interest you pay on a mortgage loan is so much less percentage wise than the amount you pay on credit card debts, car loans, etc., that I would typically advise you that this is the last debt you should pay off.
By looking into your credit history, you’ll at least know whether you will qualify for a mortgage under today’s stricter mortgage standards, or if you’ll have to go with Plan B by clicking here!
To Your Success...