(NAPS)—There are many good reasons to become a homeowner. In addition to the social benefits, the feeling of autonomy and sense of community investment, there are the tax benefits. One major tax benefit is the mortgage interest deduction (MID). The MID has been part of the federal tax code since 1913 and helps families offset the cost of homeownership.
The ability to deduct the interest paid on a mortgage can translate into significant savings come tax time. For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year.
“In today’s market, eight out of 10 home buyers must borrow money to buy a home,” said National Association of Realtors(r) chief economist, Lawrence Yun. “For aspiring homeowners who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the mortgage interest deduction help them begin building their future through homeownership.”
Of the taxpayers who itemize deductions, 80 percent utilize this benefit. This is true for people of all income levels. According to the most recent IRS tax return data available, 65 percent of the families who claim this deduction earn less than $100,000 per year.
“People who benefit most from the MID are first-time home buyers and younger homeowners,” said Yun. “These families can use the money they save to build their emergency fund, apply it toward their children’s future education or help them improve the quality of their lives right now. That’s just one of the ways owning a home can pay dividends.”
For more information about the deduction and other tax benefits of owning a home, visit www.houselogic.com.