Tax Advantages Of A Small Down Payment

by Syd Johnson

A big mortgage plus small down payment equals tax advantages?

If you are like most investors you will finance most, if not all
of the purchase price for your home. Once you move in, the home
ownership honeymoon is over, you will probably get the urge to
speed up your payments and get out debt as soon as possible.
But, should you deplete your cash reserves and increase your
mortgage payments to pay off the loans?

Are you comfortable with a large debt? The answer depends on
your comfortable level with such a large debt and your tax
situation. Your annual mortgage interest payments and property
taxes are tax deductible.

Depending on your income and the value of your home, you are
probably looking at deductions of a few hundred to a few
thousand dollars off your taxes. Once these deductions are
schedule, you lower the amount of your real income, can end up
in a lower tax bracket and pay less tax.

Mortgage interest deductions lower your tax bill The compound
effect of lowering your tax bill over a 15-year or 30-year time
span cannot be overstated. If you feel tempted to pay down you
mortgage earlier remember that you can use the cash you have on
hand to invest in other resources such building up your own
business and the stock market.

Use deductions to build up wealth Don’t get too concerned with
your annual mortgage payments because your house will
automatically increase in value every year.

You can use the extra cash to invest in a tax deferred
retirement account and secure a better financial future for your
family. If you think about it, owning a home is like setting up
an automatic savings plan. Use that to your advantage instead of
pushing yourself to the financial brink to pay off your mortgage.

Take advantage of the tax benefits of financing your home and
make your money work for you.

About the author:
Syd Johnson, Editor
http://www.rapidlingo.com