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Tax
Tax Savings and After-Tax Housing Expenses
Want to know your true out-of-pocket cost for buying your new home?
Then you need to deduct your tax savings from your total mortgage payment.
For most home buyers, much of the monthly house payment is deductible on federal
income tax returns. *Both the interest on the mortgage loan and the part of the
payment applied to property taxes may be deductible. The actual tax savings from
the deductions are tied to the individual’s, or couple’s tax bracket.
Call your tax accountant or Wing to help you estimate what your “real” monthly
costs will be for specific homes, after you subtract income tax savings. Of
course, your actual monthly payments do not change. The savings comes from the
tax deductions you can claim at income tax time once a year. Your tax savings
will gradually become less as the interest portion of your Payment gets smaller.
Most of your payment goes to interest at the beginning of the loan. Tax savings
are generally greatest for the first five years. You may want to consult your
tax advisor to discuss your individual circumstances.
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