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That's assuming your property taxes were your ONLY deduction. Assuming you finance the house, you can also deduct your mortgage insurance (400K loan might get cost you an easy 18-20K a year in interest early on). Along with this, there are charity deductions and the loads of others an accountant might tell you about.
So while yes, your property taxes THEMSELVES might not put you much over the standard deduction, I'd suspect that it's pretty uncommon that your PT are your ONLY deduction, no?
So, 15K property taxes and 20K mortgage interest gets you almost 9K back.
THis is a long way toward saying ASK YOUR ACCOUNTANT.
read what i said , i said the only difference you will see is on what exceeds the first 12,800 in deductions.
i see folks guess wrong all the time about what additional they think they will get back when they purchase a house.
as an example they may have existing deductions without the house of say 4-6k . they may have 12k in real estate and mortgage interest . in many minds they think they will get back 25% or more of that mortgage and interest they paid .
the truth is their total deductions are 18k including ALL DEDUCTIONS in the example ... the first 12,800 they get with or without the house so the only real increase in what they get back will be on 18,000 minus 12,800 which is 5200.00.
they will see a difference of about 1300.00 a year in what they pay in taxes assuming a 25% tax bracket compared to what they got as renters.
in fact half of all homeowners have total deductions including mortgage interest and taxes that do not even clear the standard deduction. they get nothing back as homeowners that they didn't already get as renters.
Last edited by mathjak107; 11-13-2013 at 02:23 AM..
read what i said , i said the only difference you will see is on what exceeds the first 12,800 in deductions.
i see folks guess wrong all the time about what additional they think they will get back when they purchase a house.
as an example they may have existing deductions without the house of say 4-6k . they may have 12k in real estate and mortgage interest . in many minds they think they will get back 25% or more of that mortgage and interest they paid .
the truth is their total deductions are 18k including ALL DEDUCTIONS in the example ... the first 12,800 they get with or without the house so the only real increase in what they get back will be on 18,000 minus 12,800 which is 5200.00.
they will see a difference of about 1300.00 a year in what they pay in taxes assuming a 25% tax bracket compared to what they got as renters.
in fact half of all homeowners have total deductions including mortgage interest and taxes that do not even clear the standard deduction. they get nothing back as homeowners that they didn't already get as renters.
This again...I think most homeowners are aware of the standard deduction. That doesn't mean itemizing doesn't save them thousands of dollars every year. Instead of throwing out arbitrary numbers, why don't we look at the actual data on this-
Table 1. Share of Tax Filers Claiming Itemized Tax Deductions
and Average Deduction Claimed, by Adjusted Gross Income (AGI), 2010
Adjusted Gross Income Number of Itemizers
Share of Tax Filers
that Itemized
Average Sum of
Itemized Deductions
Claimed Per Itemizer
$0 to $20k 3,057,363 6% $15,432
$20k to $50k 10,334,994 23% $15,810
$50k to $100k 17,258,142 57% $19,540 $100k to $200k 11,873,957 85% $27,729 <
$200k to $250k 1,450,337 95% $41,079
$250k to $500k 1,866,973 96% $55,991
$500k to $1million 527,916 97% $101,502
+$1million 274,826 98% $443,680
Most LI families fall in the bolded range: $100k to $200k 11,873,957 85% $27,729
$100k-$200k HH income, 85% of households itemize with an average $27,729 in deductions -- well above the standard deduction.
Also, considering we have some of the highest property taxes and most expensive RE in the nation, I'd say LI easily skews higher than $27.7k.
I think the OP is confused regarding the tax bill being for both school and town, not whether he or she will be able to use this as a deduction in the case if his deductions exceed the standard deduction.
The answer would be that the entire tax bill is a deduction (it does not get divided up for any reason).
With that said, and like everyone pointed out, if you have no other deductions you should use the standard deduction, and your taxes won't help you out at all. However, if you have mortgage interest, dependants, etc., then your itemized deductions will be more than the standard deduction and so you would then itemize instead.
This again...I think most homeowners are aware of the standard deduction. That doesn't mean itemizing doesn't save them thousands of dollars every year. Instead of throwing out arbitrary numbers, why don't we look at the actual data on this-
Table 1. Share of Tax Filers Claiming Itemized Tax Deductions
and Average Deduction Claimed, by Adjusted Gross Income (AGI), 2010
Adjusted Gross Income Number of Itemizers
Share of Tax Filers
that Itemized
Average Sum of
Itemized Deductions
Claimed Per Itemizer
$0 to $20k 3,057,363 6% $15,432
$20k to $50k 10,334,994 23% $15,810
$50k to $100k 17,258,142 57% $19,540 $100k to $200k 11,873,957 85% $27,729 <
$200k to $250k 1,450,337 95% $41,079
$250k to $500k 1,866,973 96% $55,991
$500k to $1million 527,916 97% $101,502
+$1million 274,826 98% $443,680
Most LI families fall in the bolded range: $100k to $200k 11,873,957 85% $27,729
$100k-$200k HH income, 85% of households itemize with an average $27,729 in deductions -- well above the standard deduction.
Also, considering we have some of the highest property taxes and most expensive RE in the nation, I'd say LI easily skews higher than $27.7k.
it wasn't a question of whether itemizing lessens taxes .
many folks don't understand how deductions work when it comes to taxes.
many don't follow the concept that the only difference they will see in their overall tax bill will be on the deductions over the standard deduction whether they itemize or not. .
many do not understand that the first 12,800 in itemized deductions will not change their tax bill at all from what it was just because they are itemizing and no longer just taking the standard deduction..
want proof of that lack of understanding? we just had a whole discussion in a city data thread when someone said you should keep a mortgage because then you can itemize the items that fell below the threshold when you couldn't take them without the interest.
we had to explain to him the only difference you will see in your tax bill will be based on what still falls out over the standard deduction.
if you couldn't take it before the mortgage interest you still won't benefit from anything below the threshold.
Last edited by mathjak107; 11-13-2013 at 06:16 AM..
Most LI families fall in the bolded range: $100k to $200k 11,873,957 85% $27,729
$100k-$200k HH income, 85% of households itemize with an average $27,729 in deductions -- well above the standard deduction.
I need to step up my game, my home isnt in this range.
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