Property taxes vs. tax deductions in home ownership?

Question

I always thought it was lame to 'invest' in real estate or use it as an excuse to deduct taxes. But please correct me if I'm wrong.

I assume depending on region and location, taxes may exceed your tax deductions by having a mortgage.

So my question is, is to save on taxes a good reason to own a house (good enough to be the only reason to put yourself in otherwise unncessary debt)?

The way I see it is : if it's an investment, the appreciation is taxable. If it's depreciated, you lost, plus you had to pay your mortgage on interest. Either way you've put yourself in a spot where you need to work more to pay the bills, which means you're barely living in the house you're working and paying for. What's the point?

Answer 1

Yes, purchasing real estate is an investment, and overall still a good value especially if you've owned for a few years. The appreciation is not taxable until you sell, and then the profit can be re-invested vs taxable. The depreciation is simply a "paper" write off and not a cost you actually write a check for for investment property. Real estate taxes, mortgage interest and homeowners insurance on primary is deductable on schedule a, real estate taxes, insurance,management fee, condo fee, repairs, mortgage interest are all deductable on schedule E thereby reducing the amount you would owe uncle same. So the purpose is that the taxpayer owning the american dream has opportunity to reduce his tax debt, by keeping several different markets backed by mortgage, insurance companies insuring them, The property is years, and when this unique "soft" turns around, which always do, the real estate investment wil more than likely far exceed any returns from low risk brokerage accounts.
Yes, we do have to work, have taxes withdrawn from our pay check, taxed heavy on IRA withdraws, and those mortgage payments. But just using a Scedule A on your own primary residence, taxes, mortgage interest you paid and insurance will actually reduce the tax due to uncle sam substantially.
Some person making the same money, with same federal tax deduction from pay check, but does not own a home , or other investment, and other types like this will be more likely to more in Federal taxes without these deductions
You should seek out a good tax attorney (also tax deductable in some areas.
Hope this helps

Answer 2

As investments go, your personal residence isn't all that hot a deal historically. We've had a couple of boom periods in recent times that have skewed the numbers recently but long term it still isn't such a great deal. You'll do better historically in the stock market, looked at purely as an investment vehicle.

The tax break that most taxpayers see is minimal from buying a home.