Money Management 101: Buying a home, especially in California, has its benefits from a tax perspective – buyers can deduct their mortgage interest and property taxes from their income after they purchase. For buyers in high tax brackets, these savings can amount to more than $1,000 per month in high-end markets.
Why is this benefit important? For payment-sensitive renters who are considering a first-time purchase and are nervous about their housing payment jumping from $2,500 in rent to $4,000 (for PITI = Principle, Interest, Taxes & Insurance), it may be enough to make them change their mind or scare them into being a renter for life.
What most people don’t realize or most lenders and realtors don’t emphasize (or bother pointing out at all), is that 
buyers can recognize their tax benefit right after purchasing by increasing their allowances or exemptions on their IRS W4 form and giving it to their HR contact. By increasing the number of exemptions – because now you own a home and can write off the interest – you don’t need to withhold as much money for the IRS. This allows the new home owner to maximize their take-home pay with each check and mitigate the pain that results from the increased home payment.
Buyers should consult with a CPA or tax planner to figure out their optimal number of exemptions. The idea is that on April 15th, you don’t pay any additional money or you don’t receive a refund from the IRS. If buyers are already claiming a handful of exemptions, then it is unlikely this benefit will give much in the form of extra income flowing into their paychecks.
Some information in this blog taken from JVM Lenders Daily Comments.
