Tax Advantages Homeowners Get That Renters Don’t….

Homebuyers get a host of tax benefits that renters don’t — critical deductions that can lower your overall tax bill.

But how much do homeowners really save on their taxes? Using 2012 IRS data, the most recent available, we calculated that a homeowner who took the average for each of four tax benefits would claim $15,871 in home-related deductions (if he or she itemizes).

1.  The interest they pay on a mortgage

2.  The points they pay on the mortgage

3.  The cost of all property taxes

4.  The cost of insuring their mortgage

Those are just the start: If Congress renews a long-standing tax credit in 2015, some homeowners can also shave their tax bill by up to $500 by making their homes more energy efficient. (The alternative minimum tax can affect whether you can claim homeowner-related tax benefits. Consult your tax adviser for advice regarding your situation.) And years from now, when they sell their home, most of them won’t owe taxes even if they pocket up to one-half million dollars in profit, unlike other investments that typically are taxed at 15% or more.

Renting still makes sense for many, particularly when you’re in transition. But you can’t deduct rent on your income taxes. That’s why it’s important to consider the tax benefits when you consider the advantages of buying vs. renting.

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