Real Estate tax Writeoffs

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Learning how to buy a house is all about educating yourself with the correct information to see if homeownership is the right move for you. People buy houses for many reasons, but one of benefits of homeownership is the tax deductions you will receive as well as tax-free appreciation.

After you buy a house you will receive a 1098 Interest statement from your lender at the end of each year. In that statement they will determine how much you paid in interest over the course of the year. The entire amount of interest paid is then 100% tax deductible. Your property taxes are also tax deductible as well. Let's take this into an example so it makes more sense.

Example:

John Smith buys a house and over the course of the year he pays the following:

$9,000 in Interest
$4,000 in property taxes
If John makes $75,000 a year
He will pay taxes on $62,000 vs $75,000.

That's it! It is a very simple process. However, it is you responsibility to claim your own deductions. Did you know a few years ago the statistic was that only 26% of home owners claimed their deductions? That's a crazy number to think of because this is a major benefit to buying a home. There has been some talk in Congress about eliminating interest write-offs so that homeowners can no longer use these write-offs. As of today, they are still in effect and it is very important that you voice your opinion on this matter should you ever have the opportunity to do so.