3 Ways Your Mortgage Affects Your Annual Taxes
Reduce your taxable income by deducting your property taxes! That deduction is a way of transferring federal funds to cities and states which impose a property tax, which allows the local government to raise property tax revenue at a lower cost to their constituents.
3. Tax Example For Mortgages
Family A rents a three-bedroom, two-bath home for $1,200 per month. In addition, they pay for all the regular maintenance including gardening service, minor repairs and snow removal. Family A’s tax deduction would be $0.
Family B buys the same house, at $170,000, with an FHA mortgage. With a 3% down payment and 4% interest rate, the monthly mortgage would sit around $1,100 after including taxes, insurance, and private mortgage insurance. A tax deduction could reduce your taxable income by almost $12,000 for the year.
There are many tax advantages to choosing a mortgage over renting. Learn more with our mortgage experts.