Tuesday, March 22, 2011
Mortgage-Interest Deduction 101
One of the benefits of homeownership is the mortgage-interest deduction. First time homebuyers are often very unclear about how this works. In an effort for clarification, and as a reference point to direct my Home Buyers to, I offer this brief explanation:
HomeBuyer A makes $50,000 a year. Her mortgage interest paid in 2010 was $7000. As a result, she will be taxed only on $43,000. The $7000 mortgage-interest is taken as a deduction from her income—she doesn’t have to pay taxes on this “income!”
Renter B makes the same $50,000 a year. Last year he paid $9000 in rent. It’s tax time and he will be paying taxes on his full $50,000 salary.
As you can see, not only does Renter B lose out on pride of ownership, but his rent money is a bye-bye—never for him to be recouped.
While HomeBuyer A enjoys the and freedom to create her property to her wishes, she also gains short-term financial benefits annually, as well as long-term benefits, when the equity of her property begins to kick in, years down the road.
Are you still renting? Were you previously a home owner?
Call me. Let’s elevate your hard earned $ into something more enjoyable and ultimately, more profitable for you and your family.
Dawn Deegan is a Broker-Associate REALTOR® with Charles Rutenberg Realty. She holds the designations of Accredited Buyer Representative (ABR®) and she is a Graduate of the Realtor® Institute (GRI). She also holds the Transnational Referral Certification (TRC), enabling her to help in real estate endeavors, world-wide. Dawn is dedicated to providing only the best possible services and expertise to her Buyers and Sellers of residential Real Estate in the Greater Orlando area. This includes Windermere, Orlando, Winter Park, Baldwin Park, and Davenport. Her emphasis is on superior delivery of sophisticated market data, quality, and value to you, the Buyer or Seller. Contact Dawn Deegan at 407 488 8074 or at DawnDeegan@cfl.rr.com. You can also visit her at www.IMoveFL.com