Very confused about tax benefits of buying...

[cleasach]

Originally Posted by aneftp

Wrong.

You take the standard deduction or itemized your deduction.

Whatever gives your the best numbers you take.

You cannot take the standard deduction in addition to itemized deduction.

That's why toward the end of your 15 or 30 year mortage when you barely pay interest people complain since itemizing deduction dies not make sense since interest deductions are so low that it makes sense to take the standard deduction.

That is exactly was I was told by the person that does my taxes. Thanks aneftp.

[stan4]

What did my accountant say about buying a home for tax purposes?

"Don't spend a dollar to save 30 cents."

Buy a home bc you want one and can afford one.

[Omaha Rocks]

Originally Posted by cleasach

I've been keeping an eye on the market in my area on the chance that we might be able to buy at some point.

One of the things I hear most frequently is all about how the tax benefits of owning are huge because you can write off all the interest and get a huge check back from Uncle Sam or adjust your dependents in order to get the money every paycheck. Well, using the scenario below it appears that we would not benefit much from owning. I just want to know if I am correct:

Co-op apartment
Mortgage = 150k (payment would be about $925. a month, the first year we would pay about $9300. in interest. I checked an online calculator for this info)
Monthly maintenance $400. or $4,800 per year (70 percent tax deductible, so $3360. per year would be deductible)

So that's $12,660 that we could write off on our taxes. The standard deduction for 2008 was $10,900. So we're looking at a $1760. difference here. Not exactly the "thousands" that people were talking about.

Is the above accurate? Do most people have other investments or something to write off to increase that figure? We have nothing to write off on taxes. all we have is our salaries and the interest on our savings account.

Thanks for any info.

You are correct. Mortgage Interest Paid is calculated under Itemized Deductions. Frankly, unless you pay a LOT of mortgage interest, you're probably not going to realize very much of an income tax benefit. Over many years of home ownership I have never found it beneficial to use mortgage interest as an itemized deduction, rather than the standard deduction.

There are many benefits of home ownership, provided you want to do that and are able to buy a home. The main benefit is paying off a home, so that later in life you're making no mortgage or rent payments. You can also, if you do it right, use the equity you have in your home as collateral and/or take out a home equity line of credit. The interest on such loans is typically very low.

Further, right now might be a good time to seriously consider buying a home, due to the $8,000 credit for first-time home buyers.

[cleasach]

Originally Posted by stan4

What did my accountant say about buying a home for tax purposes?

"Don't spend a dollar to save 30 cents."

Buy a home bc you want one and can afford one.

Not sure I get the point of this post. I'm not interested in buying for the tax benefits. That doesn't mean I can't ask about them if confused.