Owning a home is simply an expensive endeavor. Not only are home prices on average higher than any other real object for sale in a market, they also are the center of the capitalistic world. When a people are free, they must have things they can call their own, nothing better than actual property where they can have peace, prosperity, protection and security. A government of the people, for the people, and by the people will want to righteously promote home ownership. One way the American government promotes things of their liking is through changing tax incentives. An incentive is any persuasive owner that will govern a rational person to do a certain thing. Here are three ways in which the government has created incentives for the American people to buy or own their own home.

The first incentive is given with respect the actual purchase of the home. When a home is purchased and closes, there is a myriad of costs. Most of the fees and costs of closing are not covered by the government, but some are. The lending institution charges interest for there loan. Sometimes the lending institution wants some of the interest up front, so they will charge what is called interest points. An interest point is equivalent to the entire amount of money one point of interest will make over the life of the loan. Because the interest is related to the cost of the loan, the government will pay it for the buyer. Another cost at closing is the origination fee for the actual loan. Although the government does not like to pay all the closing costs and fees, this is one that a good tax accountant can get credited. The interesting part about the loan origination fee is that even if the seller pays it, the government will credit the buyer.

The most common and known about tax deduction homeowner are actually sheltered from the government by is the mortgage interest deduction. Because mortgage loans are so high and the payback period is so long, the majority of the earlier payments on the loan are interest. So let’s say a homeowner has a low three hundred dollars a month payment, then usually two hundred of the three hundred dollars is being paid back to the bank as interest. Very little principle is paid down each month. So as the government allows homeowners to deduct the interest they pay on the loan each month, this amount comes to quite a lofty number. In plain words, the government is giving home owners a large amount of money to create an incentive for them to live in their own home.

The final way the government encourages home ownership is tax deductions at the sale of the home. If a home owner has lived in a home for two years out of the last five years, then they can deduct up to $500,000 of money made on the sale of the home. This means that if a person makes money off of there home that they have lived in as the primary residence for two years, the money is tax free. This means that there can be up to $500,000 in income every two years that is not taxed.

Author Bio: Juhlin Youlien is a source for details on how to get great Chandler AZ homes for sale, Gilbert real estate deals currently for sale, Scottsdale real estate and Mesa AZ Homes for Sale.

Category: Real Estate
Keywords: homes, real estate, buying a home, selling a home, realtor, realtors, loan, mortgage, foreclosure, s