Deductions & credits

"Also, if myself and my girlfriend are on the mortgage, I assume we'd have to split the mortgage interest and property tax deduction 50/50?"

 

You would deduct the portion you actually paid.  It might be 50/50, but it might not be, depending on all your circumstances.  

 

"But I mentioned I'd be deducting $25K mortgage interest and $10K property tax, so that's over the $8K and $16050 you mentioned, right. So it would make sense to itemize my state taxes, right? Or are you just giving me those numbers for info?"

 

Filing single, you get a free standard deduction of $8000 even if you have nothing specific to deduct.   If we assume you have no other itemized deductions (no medical expenses, miscellaneous deductions, property tax or gifts to charity) then your deduction is $8000.  If you buy this apartment, and pay $35K in deductible taxes, the tax effect is that your total deductions are $27K more than previously.  So your savings are (7% x $27K).   On the other hand, suppose you already deduct $5K of other itemized deductions like gifts to charity. You are still taking the $8K standard deduction on your tax return.  Your new itemized deductions would be $40K ($35K in taxes plus the original $5K) so your total deductions are $32K more than previous and your tax savings will be 7% x $32K. 

 

If you split the expenses evenly, then your new deduction are $17K each.  But you have to look at your current situation to see how much that $17K will really increase your deductions from the free $8K you may already be getting.