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thisismyjunkacount · Joined: 29 Dec 2009 Posts: 2 1.84 Dollars($)

We are family of 4 and currently take standard deduction when filing tax. We are planning to buy a home by taking a loan of approximately $600,000. Our monthly gross income is $135,000. We are trying to find out how much tax benefit we will get for 1st and 2nd year onwards after we buy a home. What are different deductions (related to buying home) you can get when you do an itemized deduction for 1st and 2nd year? ( exm: closing cost only 1st year)

I am asking these questions as there is big difference between the tax saving figure I get when I plug in interest loan, property tax, stat tax, and other itemized deduction figures in Turbo Tax and the one I get using online calculators. Am I missing something? Does the tax saving figures from online interest saving calculators assume that you already do itemized deductions?

I appreciate your valuable input on this.

Thank You.

sara · Posted: Wed Dec 30, 2009 2:12 am Post subject:

Hi thisismyjunkacount,

Your query has been answered in the given page:
http://www.mortgagefit.com/budgeting-finance/taxbenefit.html

Please take a look at it. I hope it'll help you.

Take care.

jerry · Posted: Wed Dec 30, 2009 3:16 am Post subject:

Hi myjunkacount,

If you are buying a home, you can deduct a number of items while you file your tax returns at the end of the financial year. The mortgage interest you pay on your mortgage is tax-deductible. In the first few years, you can claim good amount deductions in the form of mortgage interest. This is because most of your mortgage payments will go towards interest in the initial years of the loan term.

The points you pay upfront at the closing can also be deducted. A point generally refers to 1% of the mortgage loan amount. So, you can deduct quite an amount of money in the first year. You will not be able to deduct the points in the subsequent years. You can deduct the property taxes you pay on your home. If you pay your property taxes through an escrow account, the amount of the taxes will be shown on the annual statement you receive from your lender. If you pay the taxes directly you need to keep the receipts with you while claiming deductions. You can also deduct mortgage insurance premiums. If you are first time buyers, you can claim the first time buyer tax credit worth $8k.

The online calculators show results based on the facts you provide as well certain assumptions. I'm not sure what type of calculator you used to find tax savings. However, the results on different calculators at times do vary from one another. I think the best option for you is to discuss this with a tax consultant or an accountant. They can give you a fair idea about how much exactly you will be able to save if you itemize the deductions.

Thanks,

Jerry

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