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I rent at $3900/month and wanted to know how much tax savings I will gain if I buy a house at 1 million? Earning $160K, married filing jointly in California.
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June 4, 2019
12:06 PM
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Investors & landlords
First, the purchase itself is not deductible (nor is the down payment), but mortgage interest and property taxes paid may be. However, Congress is considering limiting these as part of the tax reform bill.
More generally, any actual tax savings depends upon your overall tax situation, including your other deductions and credits. (As an aside, affording $1 million home on a $160,000 income is certainly a stretch.)
June 4, 2019
12:06 PM
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In your other post , you mentioned that you have an H1B visa. This article may be of interest:
<a rel="nofollow" target="_blank" href="https://www.investopedia.com/articles/personal-finance/050115/getting-mortgage-non-us-citizens.asp">...>
<a rel="nofollow" target="_blank" href="https://www.investopedia.com/articles/personal-finance/050115/getting-mortgage-non-us-citizens.asp">...>
June 4, 2019
12:07 PM
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Investors & landlords
We cannot give you recommendations, as this is entirely a personal matter.
June 4, 2019
12:07 PM
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Recommendation #1: Don't make your decision to purchase a house based on potential tax savings.
Recommendation #2: If you REALLY want to know the impact on your tax return, wait a month to see if/what new laws pass in Congress, then go to a tax professional that is familiar with the new changes so they can analyze your specific circumstances.
Recommendation #2: If you REALLY want to know the impact on your tax return, wait a month to see if/what new laws pass in Congress, then go to a tax professional that is familiar with the new changes so they can analyze your specific circumstances.
June 4, 2019
12:07 PM
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$1,000,000 x 4% interest = $40,000
Real estate tax (wild estimate) = 15,000
Total deduction =$55,000 x 25% marginal tax rate = $13,750 annual savings
This assumes your other itemized deductions, e.g. state income tax and charities, are already large enough to exceed your standard deduction.
Real estate tax (wild estimate) = 15,000
Total deduction =$55,000 x 25% marginal tax rate = $13,750 annual savings
This assumes your other itemized deductions, e.g. state income tax and charities, are already large enough to exceed your standard deduction.
June 4, 2019
12:07 PM
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Huh? $55,000 seems to exceed the current and any proposed future standard deduction.
Mortgage interest is all you can count on so far. But you can't borrow 100% as far as I know, so figure 80 % which is a 31,500 dollar interest in the first year, approximately..
Keep in mind, you will have to furnish, maintain, paint, landscape and water your home and lawn. and Hal_al's estimate of prop tax in CA is probably way low.
PS The whole tax effort is still in danger of collapse and nothing will change.
Mortgage interest is all you can count on so far. But you can't borrow 100% as far as I know, so figure 80 % which is a 31,500 dollar interest in the first year, approximately..
Keep in mind, you will have to furnish, maintain, paint, landscape and water your home and lawn. and Hal_al's estimate of prop tax in CA is probably way low.
PS The whole tax effort is still in danger of collapse and nothing will change.
June 4, 2019
12:07 PM
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55,000 -12,600 standard deduction = only 42,400 "new" deductions. But taxpayer most likely has other deductions.
June 4, 2019
12:07 PM
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Buying a home now will likely have little impact for 2017, since the year is almost over. The Standard deduction is proposed to rise substantially in 2018. And are there really any lenders who will offer an $800k mortgage on only $160k of income?
June 4, 2019
12:07 PM