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mortgage interest and exemptions question

D

Davegod75

Diamond Member
Based on my calcuations my the mortgage interest I will be able to deduct from my taxes is like 1500/month

1500 * 12 = 18000

plus about 5000 pretax going into my 401k

so in calculating the amount of exemptions i should put on my w-2 i have come to this

23000 / 3200 = 7

does that seem right?


And since I close Aug 19th should I raise them right away or wait till Jan 1. so I don't get screwed somehow and end up paying

Thanks!
 
Well if you have the IRS calculator, why do you want us? Did you try it? What did it say to use?

I'm not certain from your post what your true situation is (for example, is that $1500 a month the interest you are paying each month, or does that include other things). Many people mistakenly calculate the tax benefits from mortgage interest in their favor. Then they are shocked when tax time comes around and they have to pay in much, much more than they had calculated. So let me do a little example math for you.

I'll assume in this example that a house payment is $2000 a month for a typical young, single person. I'll also assume that $2000 is $250 for principal, $1250 for interest, $250 for property taxes and $250 for insurance. This single person gets roughly a $5000 standard deduction if he/she didn't have a mortgage.

Here is the math:
[*]Without a house: $5000 is deducted.
[*]With a house: ($1250+$250)*12 = $18000 is deducted.
[*]Net gain: $13000 in deductions.

What most people mistakenly do is to forget to subtract their standard deduction when estimating the tax benefits of a mortgage. In case of a married couple, that standard deduction is ~$10,000 and may in many cases completly wipe out the mortage interest tax benefits (it did for me and my wife last year).

Also many people forget that the full monthly mortgage payment is not 100% tax deductible: only the taxes and interest are. The principal and insurance aren't.
 
$1500 a month in interest?


I pay $550 a month for principal, interest, taxes, and insurance
(Smiles)
 
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