The biggest home ownership myth in the country is that owning a house is a huge tax break. I don’t know how many times that people have personally told me that they want to buy a home because they NEED a tax deduction!
I just shake my head in disbelief because I have done the math. If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,400 for joint filers in 2010), there is no tax advantage to owning. Assume that you buy a $200,000 house with a 5% down payment at a 6% interest rate. Your mortgage interest for the year would be $11,336. The Standard Deduction for join filers is $11,400. In this example, there is NO TAX BENEFIT.
Even when there is a tax benefit, you most always have paid much more money to maintain the house than you are saving in taxes.
By Jennifer Moran