# can someone explain tax breaks associated w/ mortages/home purchases?

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#### bulldog

##### Senior Member
10+ Year Member
15+ Year Member

So i'm hearing all these tax breaks talk if one were to buy a home. Can someone explain what it means?

Say you make:
48k/year and you pay 12k/year in taxes (~ 1k/mo in taxes).
Your mortgage is 300k (you made minimal down payment) over 30 years. ~ \$1750/mo in house payment.

So what do these numbers mean in terms of how much less tax you have to pay based on ur salary? thanks.

So are your new taxes (48k-1750*12 mortgage payments)*.25 (25% taxes) = \$6.75k in taxes paid each year instead of 12k in taxes?

#### bkpa2med

##### Full Member
10+ Year Member
Well, you subtract the interest from your income. So 48k - ~15k interest gives you around \$33k of taxable income.

#### dpmd

##### Relaxing
15+ Year Member
If you gross 48K per year and are paying 1K per month in federal taxes you need to go directly to your human resources office and adjust your witholding right now. If you are single and take the standard deduction your total tax would be about 6500. You are giving the government a mighty large interest-free loan.

Mortgage interest (and property taxes, unreimbursed job expenses, etc) can be listed on schedule A. It is only helpful if the amount you pay for these things is more than your standardized deduction. So it depends on what the interest rate is for your loan, and what you property tax rate is. Lets say you pay 15K in mortgage interest, and 4K in property taxes (and lets pretend you are single). Your itemized deduction would be 19K, while your standard deduction would be 5150. So you saved 13,850 in taxable income and in your 48K per year case you reduce your total tax to about 5100 for a total tax savings of 1400. Hope that helps.