Income Tax Reduction:
In the early years of a mortgage, most of your monthly payment covers interest on the mortgage loan. In most cases, the mortgage interest (and property tax) is deductible from your taxable income, thereby lowering your overall tax liability. Therefore, your after tax cost of home ownership can often times be lower than renting. There may be tax implications if you later sell the home at a profit. Consult your tax advisor for more information.
Tax Deductible Borrowing Power:
As your home equity increases, you can borrow against it for almost any need, including making home improvements, paying for college, or even buying a new car. Because your home equity loan or line of credit is backed by the equity in your home, you may be able to deduct that interest from your taxable income, too. This could lower your final tax liability. Consult your tax advisor for more information.