how do the tax savings work when I own a home do they offset payments or do I get it back?

Asked by Brett, New York, NY Thu Jul 24, 2008

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NonRealtor, , 23456
Fri Jul 25, 2008
You are probably better off renting. The tax deduction doesn't amount to much. If it was that great, everyone would own a house. Currently there are a lot of unhappy home owners. Do you want to be an unhappy homeowner? Wait a few years to buy, houses will be cheaper. Good luck
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Zack, , Westchester County, NY
Fri Jul 25, 2008
Just to add a bit to Janice's answer...

"If someone was not able to itemize deductions before (ie the total was less than the standard deduction) home ownership deductions will usually be enough to itemize thus letting you deduct other things that you couldn't when you used the standard deduction. "

This is a really nice way of looking at it. Its basically meaningless, but its does sound pretty. What is being said here, is that if you couldn't itemize before, and now you can, then you're not getting a full tax break from owning a home, only partial. Here's an example with totally made up numbers. Say before your itemized deductions were $3,000 and your standard deduction was $7,500. Now you add $10,000 in mortgage interest and RE taxes. So now you're itemized deductions are $13,000, so you itemize. But before your deduction was $7500 so you really were only able to deduct 55% of your tax-deductable homeownership costs. In expensive areas around NY, you're likely to be able to deduct 100% of your the interest and RE taxes, in less expensive places, its very likely you will not.

"Another tax break: Later, when you sell a personal residence for more than you paid for it, you won't have to pay taxes on the gain (up to $250,000 for an individual or $500,000 for a couple)."

I'd have said, "Later, if ..." There are a lot of people out there they are not selling their personal residence for more than they paid for it.
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., , Westlake Village, CA
Thu Jul 24, 2008
Your tax saving benefits happen when you file your taxes and you get to write off your interest on your house payments!

Congratulations on your choice to become a home owner!
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