Attention Home Owners

[The Chaver]

I would like someone to please explain the taxes you pay and tax breaks for home owners,and the benefit of owning a home.

My parents tell me that they don't get any tax breaks,and that the tax refund they get at the end of the year only covers half of the taxes they have to pay on there home??

 

[pixletwin]

Beats me but I would like to hear people chime in as I am buying my new house next month.

 

[Cocoboloboy]

I haven't heard of any tax breaks for home owners but I'd like to. It kills me every year to have to pay them.

 

[pixletwin]

Don't you guys pay your taxes when you pay your mortgage?

 

[creature4000]

only property taxes. I'm not 100% sure but it's not a break per say... but just a bit put against your taxes.

Thats not the reason to get into a home... more of it's a long term investment and you are not throwing money away on rent... is where it pays off.

 

[quiddity]

You don't get a "tax break" but you are able to deduct ALL of the interest on your mortgage on your taxes.

For my wife and I that deduction enabled us to get money back instead of paying.

It's not really a tax break though.

 

[The Chaver]

I guess my quary is,why own a home if you have to pay all that extra money in taxes at the end of the year.And then all your of your tax return goes to paying more taxes on the house.

 

[automaton]

i would much rather pay taxes on a home than pay rent on one...

 

[Darth Loki]

My tax is already apart of my mortgage payment so the state sends Suntrust the bill (same goes for insurance). I can say that my tax return was pretty damn good this year (more than double what it had ever been).

 

[pixletwin]

I am looking forward to that $7500 tax rebate next year too.

 

[The Chaver]

So you guys do see alot more money in your tax return than say a person or couple that rents?

 

[creature4000]

again it's not about the tax return... it's about what your money is actually doing for you.


You rent... your money goes bye bye.. out the door never to be seen again.


You buy a house. (most of it loaned) your money (with interest) goes into the house... when you decide to sell your house (years down the road... at least 15 to make it worth it)... you get the money that your house is worth minus what you owe. Hopefully you sell it for a bit more you paid for it. (hence the investment)

 

[Jesseawilson]

I guess my quary is,why own a home if you have to pay all that extra money in taxes at the end of the year.And then all your of your tax return goes to paying more taxes on the house.

That's not exactly how it works. You either pay your property taxes amortized over 12 months during the year by having them impounded into an escrow account by your mortgage company and then they pay them or you pay them yourself when it is tax time (in November for me).

If you want to rent for the rest of your life then more power to you however some of us have a dream of paying off our house and no longer paying a mortgage IE no rent per month. Owning a home is smart otherwise nobody would own one to rent to you. Your putting your money in terms of asset appreciation and mortgage interest tax write offs into someone pockets other than yours. It is usually the same if not less per month to own than it is to rent. So the better question is, (all things being equal) why rent? In 6 years I wont have a mortgage payment.... can you say that about your rent?

Of course I could already be in situation but I have to have what I have to have and had to mortgage a little.. LOL


Jesse

 

[pixletwin]

How are you getting out of your mortgage so soon jesse? I assume you are a young guy like my self (30 something).

 

[The Chaver]

again it's not about the tax return... it's about what your money is actually doing for you.


You rent... your money goes bye bye.. out the door never to be seen again.


You buy a house. (most of it loaned) your money (with interest) goes into the house... when you decide to sell your house (years down the road... at least 15 to make it worth it)... you get the money that your house is worth minus what you owe. Hopefully you sell it for a bit more you paid for it. (hence the investment)

Understood.But,your still not paying the same taxes and getting the same tax return as someone that rents,wright? If not,then what would scenario be for someone that owns a home. Are you paying more or less,or are you paying the same?

 

[The Chaver]

That's not exactly how it works. You either pay your property taxes amortized over 12 months during the year by having them impounded into an escrow account by your mortgage company and then they pay them or you pay them yourself when it is tax time (in November for me).

If you want to rent for the rest of your life then more power to you however some of us have a dream of paying off our house and no longer paying a mortgage IE no rent per month. Owning a home is smart otherwise nobody would own one to rent to you. Your putting your money in terms of asset appreciation and mortgage interest tax write offs into someone pockets other than yours. It is usually the same if not less per month to own than it is to rent. So the better question is, (all things being equal) why rent? In 6 years I wont have a mortgage payment.... can you say that about your rent?

Of course I could already be in situation but I have to have what I have to have and had to mortgage a little.. LOL


Jesse

I was in no way trying to diss the home owners.I am just trying to understand the taxes part of it all.I pay rent cause my credit is sh tty.If owning a home is as great as they say,then fine,I just don't want to pay anything extra at the end of the year paying taxes,and then loose my tax return as well.

 

[pixletwin]

You can pay your taxes into an escrow account (included in your mortgage). That way they don't ask for anymore at the end of the year and you might get a bit back if you overpaid. At least thats how a coworker here at my office explained it to me.

 

[IrishJedi]

You want a good anecdotal reason? Here...

I bought me first home in 1994 at age 22. It was a modest 3-bedroom house with a basement and a decent-sized fenced yard in a nice neighborhood. My monthly mortgage payment was barely more than what monthly rent on a 1-2 bedroom apartment would be... yet I was in a house, and it was mine.

While owning the home it appreciated in value, and I was also able to get Tax deductions (itemized write-offs) on the interest and property taxes, which is always nice. You can't do that when you rent an apartment.

And here's the kicker... less than 10 years later I sold the house for $30,000 more than I paid for it (and my mortgage balance was about $30,000 less as well). So I walked away with $60,000 in my pocket, which I decided to use to put down on the huge home I own today. I then realized that's how it works for a lot of people. That's how you end up in nice, huge palatial houses. You simply "trade up" every 10-15 years (if you choose). Or I could have chosen to buy a similar house and kept a nice $60k windfall. Or stayed there another 10-20 years and watch my equity continue to rise.

In any case, were I renting those 10 years I would have had no write-offs during the time and when I decided to leave I'd have NOTHING to show for it $$ wise.

So, I think the question SHOULD be, if you had the choice... "Why would you ever rent??"

 

[Vader AL]

You do get a tax break(at the end of the day though it doesn't cancel out the interest on the loan) but you "own" the house and property and also benefit if/when the house appreciates so you are paying towards something and not just throwing away money on rent.

 

[The Chaver]

You want a good anecdotal reason? Here...

I bought me first home in 1994 at age 22. It was a modest 3-bedroom house with a basement and a decent-sized fenced yard in a nice neighborhood. My monthly mortgage payment was barely more than what monthly rent on a 1-2 bedroom apartment would be... yet I was in a house, and it was mine.

While owning the home it appreciated in value, and I was also able to get Tax deductions (itemized write-offs) on the interest and property taxes, which is always nice. You can't do that when you rent an apartment.

And here's the kicker... less than 10 years later I sold the house for $30,000 more than I paid for it (and my mortgage balance was about $30,000 less as well). So I walked away with $60,000 in my pocket, which I decided to use to put down on the huge home I own today. I then realized that's how it works for a lot of people. That's how you end up in nice, huge palatial houses. You simply "trade up" every 10-15 years (if you choose). Or I could have chosen to buy a similar house and kept a nice $60k windfall. Or stayed there another 10-20 years and watch my equity continue to rise.

In any case, were I renting those 10 years I would have had no write-offs during the time and when I decided to leave I'd have NOTHING to show for it $$ wise.

So, I think the question SHOULD be, if you had the choice... "Why would you ever rent??"

Got it,owning home good.. renting bad...

Itemized write offs?? How much are we talking here?