Taxes and Tax Preparation
Home Buying
Income Taxes

How can buying a home help with your income taxes?

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Wiki User
2008-02-05 23:10:24

The interest you pay when you buy home is an itemized deduction

on your tax return. As long as the interest and your other itemized

deductions exceed the standard deduction, they reduce your taxable

income, so you pay less income tax. The property taxes you pay are

also generally deductible. The gain on the increases in value

(ignoring some million $ exceptions) gets virtual tax free

treatment on sale. As noted above: The interest expense, which is

actually not on the home but on the mortgage that is secured by the

primary home, is deductible. (Of course, there is a true expense to

that also). Frequently, having made the threshold for itemizing

deductions, (by incurring the interest), allows someone to start

itemizing and deducting other items they wouldn't have been able to

before. On the other hand, the standard deduction was a "give me"

in determining taxable income, and your only going to benefit by

the amount above it that you can itemize.

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