Mortgage Interest Tax Deductions
One of the major benefits of owning a house is that the interest that you pay on your property is tax deductible. You just don’t have this perk when renting. Other forms of interest are not deductible, but thanks to the Tax Reform Act of 1986, mortgage interest is. In fact, mortgage interest tax deductions are one of the most widely known deductions among American tax payers.
There is no limit to the amount of interest you can claim on your tax deduction. Even if your mortgage interest rate goes up or down, you can claim all of the interest that is paid toward your mortgage.
So here is the major benefit. You are able to save money on your yearly taxes, as well as build equity on your property. Even more, if interest rates increase, you can still deduct that amount. People who rent do not have this ability.
But it is not as simple as you may think. The type of interest you are paying plays a big part on whether or not you can make a yearly deduction. Be sure to speak with a financial/ tax counselor before preparing to make such deductions. A counselor can bring you up to speed with the Internal Revenue Code (IRC) and other rules and regulations that apply to your situation.