South County Real Estate Today, Gretchen Merrick, real estate, Realtor, median price, average price, days on market, Santa Clara County, South County, Morgan Hill, San Jose, Gilroy, San Martin, Bay Area, property, properties, home, house, buy, sell, Grethen Merrick

money_home.jpgThe tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership.   Here’s an example of how it works.

Assume: $9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
Plus $2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
$12,577 = Total deduction

Then, multiply your total deduction by your tax rate. For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.



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Comment by How to Calculate the Tax Benefits of Homeownership · Invest-In-Real-Estate.ExplainedOnline.Net on October 14th, 2008 @ 1:48 pm

Hi Gretchen,

I like the clear way you show people the benefits of the tax deductions. Not everyone realizes how owning a home and having a mortgage can reduce our current taxes - even in this economic mess! Keep up the good information.

Thanks,

Harriet

Comment by Harriet Pecot on October 17th, 2008 @ 10:30 am

Thanks Harriet! Even if appreciation ain’t what it used to be, at least we have a tax deduction!

Comment by Gretchen Merrick on October 17th, 2008 @ 10:53 am

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