March 27, 2009, Newsletter Issue #160: Tax Benefits of Home Mortgages
Tip of the Week
There are many benefits that come with home mortgages. Home ownership is a benefit in itself, but a larger, more tangible benefit comes from the tax breaks that you can qualify for as a home owner. Taxes will vary based on the state and locality in which your home rests. However, there are invariably many tax benefits that come with home mortgages.
Did you know that every penny of interest paid on your mortgage is tax deductible? It's true. Home mortgages and their payments are made up mostly of interest payments. Since you pay taxes on your home, the taxes are waived on your mortgage interest to avoid double taxation. Compare this to paying rent, where you get no benefit.
One state in particular has a great benefit from home mortgages. That is Florida where they have the Homestead Act. The Florida Homestead Act states that a homeowner can declare their residence as their primary, homesteaded, property. They can then take an income deduction of up to $25,000 on their returns for their homesteaded properties. In a state like Florida that is already great for taxes, home mortgages will add a whole new level of tax friendliness.
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