Homeownership is a dream of many Americans. Whether it is economically more beneficial to rent or buy depends on many variables, including whether home values are rising or falling, how long the indiv...idual plans to stay in one location, and whether or not the individual is willing to take on the responsibility of maintaining the upkeep on a home. However, the tax benefits available to homeowners can provide significant savings. The advantages of owning or renting are different for everyone so each individual's situation needs to be evaluated before the decision.
APPLICABLE TAX LAW.
1. Real estate taxes are deductible as itemized deductions if the taxpayer owns the real estate and the taxes are based on the assessed value of the property.
2. Premiums paid for acquisition indebtedness for mortgage insurance contracts after December 31, 2006 and before January 1, 2012 may be treated as deductible mortgage insurance.
3. Home mortgage interest paid, including acquisition debt and home equity debt, may be deductible as an itemized deductible as itemized deduction.
4. Deductible points paid at closing to purchase a home are generally deductible as mortgage interest.
5. If the seller pays points, the buyer is treated as having paid the point for purposes of an itemized deduction.
6. Individuals can exclude up to $250,000 ($500,000 MFJ) of gain on the sale of a qualifying principal residence
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