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The Tax Benefits of Owning a Home

Your home is an investment: Aside from all the other amenities of home buying, you can think of it as "forced savings" as well. Unlike with rent, each home mortgage payment helps build equity on an amortizing loan (i.e., one that reduces the principal with regular payments).

In addition to this, as your home increases in value, you can get low cost loans for any purpose by borrowing against your equity. Many use this to consolidate high-interest debts into one easy payment.

Tax benefits: You may be eligible for significant tax deductions after buying a home. Be sure to consult a trusted tax expert for all the details on your property value.

Both mortgage interest and real estate taxes are deductible from your federal returns. Many states allow deductions as well.

Rent vs. Own: Buying a house is a big step, but it can help you substantially save money by building equity. To find out if buying is the right option for you now, try our Rent vs. Own calculator.

Home Buyer Tip

Use your home equity to reduce debt and taxes

If you're running balances on credit cards, you cannot deduct the high interest you're currently paying. But a home equity loan may offer much lower interest rates and it's tax deductible, which may save you even more. (Consult your tax advisor for details.)

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