The Tax Benefits of Home Ownership – Myth or Reality?
A number of questions have come up from the post I wrote a few weeks ago about buying our new home. One of the most frequent ones goes something like this: “Great job outlining the costs of homeownership, but what about the benefits? I get a tax deduction for the interest and property taxes I pay on my home!” Today, we put the above statement to the test. Are potential tax deductions actually valuable for home owners? Of course we cannot do this without a basic understanding of the U.S. tax system. So here is a quick high level crash course*. Let’s start with the basic income tax formula: As you can see we … Read more…