Taxes - Big Money

$1.2 trillion in taxes paid
Home Ownership - $100 billion in taxes saved

There are countless reasons why someone decides to buy a home.  I believe that the emotional satisfaction of knowing that a home is yours is as the ad says, priceless.  However, there is a financial component that is also extremely important. 

The government also believes in home ownership and so they have provided some significant tax incentives to enable us to do so.  Mortgage interest and property taxes are currently deductible items on both Federal and California taxes. (There are more opportunities to deduct if you own rental property.)

The most recent detailed tax information available is from tax year 2012.  In that year, Americans had $9.1 trillion in adjusted gross income and $6.4 trillion in taxable income.  The difference between adjusted gross income and taxable income is largely in deductions and exemptions. 

Among those 46 million Americans that itemized on their taxes, 34.4 million deducted $328 billion for mortgage interest and 39.2 deducted $172 billion in real estate taxes. At the average tax rate, these real estate deductions helped tax payers save roughly $100 Billion in 2012.