Beyond the joy of homeownership, did you know that owning your own home does great things for your bottom line? It’s true. That’s mainly because the interest you pay on your mortgage is tax deductible.

In the last article, I talked about lowering your taxable income in order to stay or go down into a lower tax bracket. The tax deductible mortgage interest is one of the ways you can lower your taxable income.

This tax benefit is at its best when you have just bought a new house, have had to get a mortgage with a higher interest rate, or had to take out a second mortgage. Basically, the more you owe, the more interest you’re paying (especially early in the loan term), and therefore, the more tax deduction you get. Don’t get me wrong - that’s no reason to opt for a higher interest rate than you need to, or take out any more mortgage than you have to. You’re always going to pay more in interest than what you get back in the deduction. Nevertheless, this is one way the federal government helps out homeowner’s in making our money stretch.

So if you have the option of owning vs. renting, opt to own. You’ll get a break on your taxes that renter’s never see.

This entry was posted on Monday, March 26th, 2007 at 8:53 pm and is filed under Tax Deduction. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.