There are tax benefits to owning your home, and these should be considered by buyers as an incentive to buy a home before the end of the year. One of the tax benefits many homeowners enjoy is the mortgage interest deduction (MID).
The deduction is available for interest on mortgages for a principal residence and one additional residence. Sixty-three percent of families who claim the MID earn between $50,000 and $200,000 per year.
While the MID is a great benefit, people usually don't buy homes only because of the deduction. They buy homes to satisfy social, family and personal goals. However, a recent National Association of Realtors® survey of home buyers found that both first-time buyers and repeat buyers ranked the desire for tax incentives as an important reason to buy.
There are tax benefits in terms of local homestead exemption reduction of taxes on a personal residence that can be as much as 40% in Michigan. So if you own your own home, your property taxes are reduced by this much with the exemption filed. One can of course assume "Well if I rent, I do not pay any property taxes".
This assumption is a complete falsehood. You are paying property taxes in the form of higher rent. When a landlord owns a home, they pass the cost of the property taxes onto the renter. So a non-homesteaded home in Michigan is 40% higher in property taxes if the owner of the property does not live in the residence. The cost of property taxes, plus the additional 40% are passed on to you as the renter.
So there are definitely several tax advantages to home ownership and less for renters in actual fact. Why pay higher taxes when you can own your own home? To find out how to get started with buying your own home, work with an experienced Realtor that knows your market area.
I am a Realtor in Battle Creek, Michigan and I have helped many first-time home buyers become homeowners all over Southwest Michigan. I can be reached at: 269-441-8182 or through my website at: www.michaeldelaware.com.
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2010 'REALTOR OF THE YEAR'
For the Battle Creek Area Association of Realtors
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