If you’re considering whether home ownership is the right decision for you, there are lots of different factors you’ll want to take into account. Do you want to keep moving around, or are you ready to lay down roots in a community? Are you prepared for the additional upkeep that home ownership requires?
But one of the big factors in home ownership that few potential buyers consider is the tax benefits of getting a mortgage. Although it may seem counterintuitive, getting a mortgage on a property that you own can reap lots of dividends come tax time.
So how does a mortgage work for you and help you keep more of your hard-earned money? Here’s what you need to know.
Mortgage Interest Deductions: How Your Mortgage Interest Saves You Money
If you’re a homeowner in the United States, your mortgage interest is tax deductible. The mortgage interest tax deduction was introduced in 1913, and is one of the longest standing and most used tax deductions out there. The deduction allows you to deduct all of your mortgage interest payments from your federal taxes.
But in order to deduct your interest payments, you’ll need to meet certain basic eligibility requirements. Firstly, you’ll need to file Form 1040 and itemize your deductions on Schedule A in order to be eligible. You’ll also need to be the primary borrower named in the mortgage – you can’t deduct interest on someone else’s mortgage, even if you’re the one making the payments.
And finally, you need to (at some point) make a payment on your h