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SANTA CRUZ SENTINEL WHO'S WHO IN REAL ESTATE THURSDAY, MARCH 31, 2016 7 Discover The Difference Discover Tony Aprile 831.588.7800 BRE #01167773 List with the Leader www.tonyaprile.com A Name You Can Trust association It's that time of year when we all sharpen our pencils (or, more accurately, open our laptops) and get ready for tax time. If you were among the mil- lions of first-time homebuyers in 2015, you're in for a nice surprise this tax season. Homeownership comes with some impressive tax benefits. Depending on your situation, there may be thousands of dollars coming back your way. For renters, those benefits are off the table. That's not to say that renting isn't a viable option, and it's true that renters enjoy some benefits that home- owners don't. But if you're on the fence about buy- ing a home, these tax advantages might just tip the scales and put your dream home within reach. The mortgage interest deduction Homeowners know this is a big one. The mort- gage interest deduction lets homeowners deduct the interest on home mortgage loans (link is exter- nal) valued at $1 million or less. This deduction is especially helpful in the first few years of a mort- gage, when the monthly payment goes largely to- ward interest. Here's an example: Let's say you have a $250,000, 30-year, fixed-rate mortgage with a 4.5% interest rate. You'll pay roughly $11,000 in interest in the first year. Assuming you're in a 25% income tax bracket, deducting that interest will save about $2,750 in taxes. The same doesn't apply to renters, as they don't have mortgages. Instead, their landlord gets the benefit while the renter helps defray the cost. Point deductions for homebuyers Interest rates remain largely favorable for con- sumers, but there are still options for lowering those rates when you purchase. One is by purchas- ing what are known as "discount points." Typically a "point" costs 1% of the loan amount and results in a lower interest rate that can yield savings over the life of the loan. What many bor- rowers don't know is that those points are usu- ally deductible. For example, assuming again that you're in the 25% income tax bracket, $1,000 spent on a discount point would yield a $250, one-time tax savings (calculated as $1,000 x 0.25). By Tom Salomone, president of the National Association of REALTORS ® Still Renting? You're Missing These Tax Advantages continued on pg. 9