Income Tax Savings

Income Tax Savings

 

Because of income tax deductions, the government is basically subsidizing your purchase of a home.  All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

 

For example, assume your initial loan balance is $150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest.  If your first payment is January 1st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

 

Property taxes are deductible, too.  Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

 

As always, we advise you consult with a tax professional about your tax situation.  If you have a comment or question, please feel free to leave that below.