As we covered last week, one of the biggest benefits of home ownership is building equity. But besides the equity aspect, the next most important benefit of owning a home for many Americans is the tax write off. Now, I’m not an accountant, and I can’t guarantee that everything I say will apply to everyone in every situation, but for most of us, there are great tax savings made possible by owning a home.

The biggest deduction comes from mortgage interest. 100% of the interest on your home is deductible, assuming your mortgage is for less than $1 million. In addition, the interest on any equity based debts (such as a Home Equity Loan or Line of Credit) can also be tax deductible. The deductibility of taxes on equity based products can, however, vary based upon your Loan To Value, income, and loan size, and it might make sense to contact a qualified loan consultant or an accountant.

Another great deduction surrounds your property taxes. Generally speaking, you can deduct your property taxes 100% for the current tax year. This includes all property taxes paid during the fiscal year and does not include money escrowed for use the next year.

Mortgage tax incentives can be powerful tools in helping to lower your annual reported income. By lowering your taxable income, you will be saving yourself money on those dollars, and potentially lowering your tax bracket which could tremendously lower your annual tax obligations.

If you have any questions about the benefits of home ownership or about the tax incentives of a mortgage, please contact me. And if you have anything to add about the tax implications of home ownership, please leave a comment.