An important part of buying a house is sitting down
with your Realtor or a mortgage lender to get a clear idea of how much you can
afford. They will add up all of your monthly expenses, the mortgage payment,
insurance, real estate taxes, homeowners or condo association fees--and the
grand total can throw you into shock.
The important thing to remember is that the grand total isn't really the
bottom line. When you add your tax savings to the equation, you may be
pleasantly surprised. During the early years of your loan, almost all of the
mortgage can be deducted from your state and federal income tax. The same is
true of your real estate taxes. If you use part of your house as a home office,
you may be able to qualify for additional tax savings. In some areas, homes with
ground floor apartments are popular for offsetting part of the mortgage and
offering even more tax savings. When you make calculations about your monthly
costs that include the tax savings, you may find that owning your own home is
less expensive than renting a house or apartment of comparable size.
Always consult your accountant regarding tax savings and deductions.