Tax Benefits of Homeownership

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works.


Assume: 

    $9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7%, using year-five interest) 
    $2,700 = Property taxes (at 1.5% on $180,000 assessed value)
    ______

    $12,577 = Total deduction

Then, multiply your total deduction by your tax rate. 

    For example, at a 28% tax rate: 12,577 x 0.28 = $3,521.56



Tax Benefit:  

    $3,521.56 = Amount you have lowered your federal income tax (at 28% tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.