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Hey guys, we are thinking about buying in jericho and as we all know, the average property tax there is about $15k of which probably $10k goes to the schools.
Now I believe the property taxes are deductible when we do our taxes at the end of the year but if so, do we get savings based on the total $15k number or just the $5k number and school taxes are not included.
Anybody knows if savings are based on the full taxes paid?
Also, how much income taxes are we savings by moving out of NYC, 4% ?
Hey guys, we are thinking about buying in jericho and as we all know, the average property tax there is about $15k of which probably $10k goes to the schools.
Now I believe the property taxes are deductible when we do our taxes at the end of the year but if so, do we get savings based on the total $15k number or just the $5k number and school taxes are not included.
Anybody knows if savings are based on the full taxes paid?
Also, how much income taxes are we savings by moving out of NYC, 4% ?
Thanks.
All real estate taxes are eligible deductions (school and general). The actual savings depend on your individual situation, i.e. adjusted gross income and total itemized deductions.
The best way to judge how much you're saving in NYC income taxes would be to look at last year's tax return
Beware the AMT. If you are in AMT land you will not be able to reap the full benefits of property tax deductions.
So true. But you will get a mortgage deduction. When we moved out of NYC the savings from the income tax completely offset the property taxes on our house.
If you are a couple the standard deduction is 12,800.
Add up all your deductions from schedule a , assuming you do not trigger the amt your taxes will only reflect a difference in the amount over the standard deduction.
Basically the first 12,800 in deductions you have don't count.
don't make the mistake thinking you will see a difference on your total deductions.
only after subtracting out 12,800 will it count towards any difference.
Also does it mean that we can only deduct up to 12,800 of property taxes? Does that mean someone with 12,800 of property taxes and someone with 15,000 of property taxes yield the same benefit?
it means that everyone, whether a homeowner or renter gets the same allowance of 12,800 in deductions as a standard deduction if they are a couple..
if all your schedule A deductions come to 15,000 you get the first 12,800 any way even if you did not spent any money for mortgage interest and real estate taxes so the only deductions that will effect your taxes is what is above that.
in this example you would have 2,200 over and above the standard deduction to write off. in the 25% tax bracket that would give you back an extra 1200 bucks in real dollars you would see.
a far cry from what most people think when they buy a home but they forget they have to exceed 12,800 to see any difference from buying.
a far cry from what most people think when they buy a home but they forget they have to exceed 12,800 to see any difference from buying.
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.
Hey guys, we are thinking about buying in jericho and as we all know, the average property tax there is about $15k of which probably $10k goes to the schools.
Now I believe the property taxes are deductible when we do our taxes at the end of the year but if so, do we get savings based on the total $15k number or just the $5k number and school taxes are not included.
Anybody knows if savings are based on the full taxes paid?
Also, how much income taxes are we savings by moving out of NYC, 4% ?
Thanks.
If you file your tax return through an accountant, you can ask your accountant. Not sure if there is any online calculator on this. If not, you may run some tax preparation software to get some idea about the numbers.
However, it may not be a good idea to buy a house just because you can deduct property taxes and mortgage interests from income taxes.
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