The tax deductions you’re eligible to take for mortgage interest and property
taxes greatly increase the financial benefits of homeownership. Here’s how it
works.
Assume:
$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent,
using year-five interest)
$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.
Reprinted from REALTOR® magazine with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights reserved.
