How to Calculate the Tax Benefits of Homeownership
Date: Tuesday October 14, 2008Posted in: real estate, tax benefits, homeownership
The 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.
3 Comments
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 amThanks 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 amLine and paragraph breaks automatic, e-mail address never displayed, HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
[…] Original post by | South County Real Estate Today […]
Comment by How to Calculate the Tax Benefits of Homeownership · Invest-In-Real-Estate.ExplainedOnline.Net on October 14th, 2008 @ 1:48 pm