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Monday, April 18, 2016

Buying a Home - If the Standard Tax Deduction is More Than Mortage Interest Deduction, Why Buy?

Buying a home is more than just a tax deduction. 

Today is tax day - April 18, 2016.

I just read an article this past weekend that talked about how people are not buying a home now because the tax savings is just not there.   And, although I am not a tax advisor, I can see the point.

At a certain price, on the surface, it appears to not make sense to buy a home when the the standard mortgage interest tax deduction for a married couple filing jointly is $12,600 for the 2015 tax return.   So it would seem the mortgage interest paid would have to be in excess of $1,000 a moth to make it worthwhile.

Still there are other benefits to buying a home.

There is the opportunity to build equity as the mortgage principle is reduced over time and the value of the home increases.  This has long been the case. 

Over the long term buying a home is cheaper than renting as the price of rents increase and rarely decrease.

Then there is the stability component.  In addition to the inevitable rent increases there is always the possibility of a landlord/property owner selling.  You are not paying another person's mortgage.  The pride of home-ownership. 

Consider the lifestyle flexibility  offered by being able to modify, make changes, update a house you own within the restrictions imposed by association rules instead of asking some landlord!

Prices are rising.

Interest rates are low right  now. 

What will the prices and interest rates be next year or in two years?

Consider buying a home now because it is more than a tax deduction.


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