Dumb question about mortgage interest deductions.

[temeculaguy]

Those are very good examples of how to estimate the income tax deduction, I have a basic one that I use to explain it to people who get lost in the details or are new to this (as I suspect the OP is based on his misconception, not an insult just an observation).

Here goes:

Measure the principal and interest against your current rent.

That’s it!

Taxes, insurance and hoa will essentially be covered by the tax benefit. scenarios vary a little, sometimes it’s too basic, in ocrenter’s scenario given above, it’s about a 10k rebate but 7500-8000 outlay, throw in water that landlords pay and maybe some lawn care and it’s a tie.

So when evaluating a purchase and trying to determine if it is rent nuetral compared to what you already pay in rent, just go to a basic mortgage calculator that only calculates P&I and compare the two numbers, head to head.

For condos, it doesn’t always work, especially when they have really high association fees like some high rise ones do. For suburban condos it is usually a wash, they might have a 300 assoc but it includes structural fire insurance, trash, gardner, exterior water, pool, etc. so the number is a bit of a soft number. but comparing agains rent for the same condo, you may need to adjust the formula a little.

[mike92104]

Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.

[mike92104]

Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.

[mike92104]

Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.

[mike92104]

Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.

[mike92104]

Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.

[Eugene]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

My calculator says $170…$200/month if you’re married, $370..$400/month if you’re single.

[Eugene]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

My calculator says $170…$200/month if you’re married, $370..$400/month if you’re single.

[Eugene]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

My calculator says $170…$200/month if you’re married, $370..$400/month if you’re single.

[Eugene]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

My calculator says $170…$200/month if you’re married, $370..$400/month if you’re single.

[Eugene]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

My calculator says $170…$200/month if you’re married, $370..$400/month if you’re single.

[temeculaguy]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

If I may offer a suggestion, try to adjust your sights down just a bit. That’s nearing 4x income and you didn’t indicate if you had 20% down, if you are using the 270 figure for tax purposes then it’s likely near the loan size (you can’t use the purchase price for tax purposes, just the loan amount when looking at calculators), that may be too much debt load for you, especially if it’s your first house. There are lot’s of factors like where you are in your life and career, if you will be making more in the near term. I say start the search in the 200-225 range.

3x income is a nice rule of thumb, cushion is good. without knowing a thing about you, no kids now doesn’t always mean no kids ever, ask around, it happens.

And you should compare to rents, it’s a basic fundamental, but tax savings isn’t, that is just a factor. Don’t buy on a factor and ignore a fundamental.

Giving $4 to the bank in order to avoid giving $1 to the government, still leaves you out $3, what these wise people are telling you is that if you are already giving that $3 to your landlord, then it’s time break out the calculator, but if you’re only giving $1.50 to the landlord, then it isn’t.

[temeculaguy]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

If I may offer a suggestion, try to adjust your sights down just a bit. That’s nearing 4x income and you didn’t indicate if you had 20% down, if you are using the 270 figure for tax purposes then it’s likely near the loan size (you can’t use the purchase price for tax purposes, just the loan amount when looking at calculators), that may be too much debt load for you, especially if it’s your first house. There are lot’s of factors like where you are in your life and career, if you will be making more in the near term. I say start the search in the 200-225 range.

3x income is a nice rule of thumb, cushion is good. without knowing a thing about you, no kids now doesn’t always mean no kids ever, ask around, it happens.

And you should compare to rents, it’s a basic fundamental, but tax savings isn’t, that is just a factor. Don’t buy on a factor and ignore a fundamental.

Giving $4 to the bank in order to avoid giving $1 to the government, still leaves you out $3, what these wise people are telling you is that if you are already giving that $3 to your landlord, then it’s time break out the calculator, but if you’re only giving $1.50 to the landlord, then it isn’t.

[temeculaguy]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

If I may offer a suggestion, try to adjust your sights down just a bit. That’s nearing 4x income and you didn’t indicate if you had 20% down, if you are using the 270 figure for tax purposes then it’s likely near the loan size (you can’t use the purchase price for tax purposes, just the loan amount when looking at calculators), that may be too much debt load for you, especially if it’s your first house. There are lot’s of factors like where you are in your life and career, if you will be making more in the near term. I say start the search in the 200-225 range.

3x income is a nice rule of thumb, cushion is good. without knowing a thing about you, no kids now doesn’t always mean no kids ever, ask around, it happens.

And you should compare to rents, it’s a basic fundamental, but tax savings isn’t, that is just a factor. Don’t buy on a factor and ignore a fundamental.

Giving $4 to the bank in order to avoid giving $1 to the government, still leaves you out $3, what these wise people are telling you is that if you are already giving that $3 to your landlord, then it’s time break out the calculator, but if you’re only giving $1.50 to the landlord, then it isn’t.

[temeculaguy]

[quote=mike92104]Tons of good info. I’m not trying to compare to rents. I’m wondering about how much I will save in taxes on a 270k’ish house with a household income of 75k and no kids.[/quote]

If I may offer a suggestion, try to adjust your sights down just a bit. That’s nearing 4x income and you didn’t indicate if you had 20% down, if you are using the 270 figure for tax purposes then it’s likely near the loan size (you can’t use the purchase price for tax purposes, just the loan amount when looking at calculators), that may be too much debt load for you, especially if it’s your first house. There are lot’s of factors like where you are in your life and career, if you will be making more in the near term. I say start the search in the 200-225 range.

3x income is a nice rule of thumb, cushion is good. without knowing a thing about you, no kids now doesn’t always mean no kids ever, ask around, it happens.

And you should compare to rents, it’s a basic fundamental, but tax savings isn’t, that is just a factor. Don’t buy on a factor and ignore a fundamental.

Giving $4 to the bank in order to avoid giving $1 to the government, still leaves you out $3, what these wise people are telling you is that if you are already giving that $3 to your landlord, then it’s time break out the calculator, but if you’re only giving $1.50 to the landlord, then it isn’t.

[Author]

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