Many of you know there are tax benefits to owning a home. But what exactly can owning a home save you? The tax deductions you’re eligible to take for mortgage interest and property taxes is one of the financial benefits of home ownership.
If you want to know how much home ownership could save you try this formula:
Mortgage Interest + Property Taxes = Total Deduction
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Total Deduction x Tax Rate = Amount SAVED!
Here’s how it works.
Assume:
$9,877 = Mortgage interest paid (a 30 year loan of $150,000, at 7%)
$2,700 = Property taxes (at 1.5% on $180,000 value)
______
$12,577 = Total deduction
Then, multiply your total deduction by your tax rate.
For example, at a 28% tax rate: 12,577 x 0.28 = $3,521.56
$3,521.56 = Amount you have lowered your federal income tax (at 28% 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.
If you have any question about these benefits, or if you are ready to start looking for your new home, please contact a Neighborhood Expert. They will have valuable information about the housing market in your neighborhood.
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