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Tax Advantages of Home Ownership

Tax Advantages of Home Ownership

If you ask most people, owning a home is part of the American Dream. For others, owning a home is about making wise financial decisions. By owning a home, you are investing in your own long-term wealth. Even if you don’t have the luxury of paying cash for your home, your mortgage payment includes Principle Payments. Each month, a portion of your mortgage payment goes towards paying off the loan. This is called a Principle Payment. This is a form of forced savings for many. Above and beyond building wealth, there could be some tax advantages associated with owning a home.

Disclaimer, I am not a tax expert. However, if you need a referral to a reputable tax professional, I have one on speed dial! Now, lets list off some of these potential tax advantages that you should ask your tax professional about!

Mortgage Interest Deduction

One of the top advantages is mortgage interest deductions. According to The Tax Policy Center, “Homeowners who itemize deductions may reduce their taxable income by deducting interest paid on a home mortgage. Taxpayers who do not own their homes have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

Imputed Rent

Economists say that one benefit of home ownership is “Imputed Rent”. Imputed Rent can be a tough economic theory to understand, so I will give you an scenario to better lay it out. Lets say that you are paying rent to your landlord on a 2 bedroom condo for $1,000/month. You get no tax deduction on that rent, and your landlord pays taxes on $1,000 in income from your rent. Then, you decide to buy your own comparable condo. Imputed rent is based on the logic that instead of paying your landlord, you’re now paying yourself that $12,000/year and it is untaxed.

Property Tax Deductions

The Tax Policy Center also lists Property Tax Deductions as an advantage to home ownership. “Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

Capital Gains Exclusions

Taxpayers who sell assets such as stocks must usually pay capital gains tax on any profits made on the sale. But homeowners are allowed to exclude from their taxable income up to $250,000 ($500,000 for joint filers) from capital gains tax on the sale of their homes if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.


Home ownership may be part of the American Dream, but it is also a great financial goal. Tax advantages are just some of the advantages of owning your own home. If you are thinking about firing your landlord and becoming a home owner, I highly suggest you reach out to a Trusted Real Estate Advisor for some guidance and further information about home ownership. Myself, and all of our agents at Duncan Group Properties are equipped to help you along this exciting road to owning a home!


My name is Ford Duncan, and I am a Real Estate Advisor and the Operations Manager with Duncan Group Properties in Conway, South Carolina. I have extensive experience in both the resale and new construction markets, as well as working with real estate investors. Thanks for checking out my blog post!


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