Save thousands with a home purchase

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There are many great reasons for purchasing a home. Whether you purchase a home to save money by not paying rent, make money on increasing property values (6.8 % per year since 1968. source N.A.R.) Or you just want to have a home to call your own. One of the best reasons to purchase a home is the money you save by not paying taxes. Homeowners can deduct both interest and property taxes.

If you purchase a home for $524,020 and property taxes are one percent of the property value, the property tax deduction for the home would be $5,240 each year. In the first 12 months, the interest paid on the home loan would total $24,470 (assuming a 20 percent down payment with 5.87 percent fixed rate mortgage).

Your total mortgage interest deduction and property tax deduction for the first year of homeownership would be $29,700. If you fall into the marginal 25 percent tax bracket, the total tax savings in the first year would be $7,430 ($29,700 interest paid and property taxes multiplied by the 25 percent marginal tax bracket).

If two households making the same amount of money are compared side by side, and one household owns their home while the other does not, the tax savings of the homeowners are significant. For example, if a household bought a home for $445,400, after accounting for mortgage interest and property tax deductions, their taxable income is $87,105. Let’s assume these homeowners have no other deductions, their total taxes owed to the IRS would be about 15,120. If we look at a renting household with the same earnings and marital status, their taxable income will be $105,000 and they will pay about $19,580 in taxes. Because of the interest and property tax deductions, the household that owns its home is able to reduce taxable income and save over $4,400 in taxes.

Owning a home is cheaper in the long run due to huge tax deductions, property value appreciation, and saving money by not paying rent. If owning a home is important to you, give us a call and we can show you how to buy a home.

MoxleyTeam.com

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The Moxley Team   | August 13, 2006

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Moxley Team serves Pleasanton Home Buyers and Pleasanton Home Sellers. From Dublin Ranch Condos to Dublin Ranch Luxury Homes the Moxley Team of Alain Pinel in Pleasanton provides Home Buying Tools and Home Selling Tips. MoxleyTeam.com provides info from Pleasanton Home Sales to Dublin Ranch Developments, Dublin Ranch News and Foreclosures in Pleasanton and Short Sales in Dublin Ranch.