Things a Real Estate agent or FSBO should know. Well the answer is yes, no and maybe. Oh yeah how can that be? Is there more benefit to having a conventional or FHA mortgage? In the first year of an FHA mortgage or any mortgage for that matter there are extra deductions that make for greater tax benefits. After the first year tax benefits from an FHA mortgage are much easier to calculate. And since you will probably keep your mortgage for more than one year lets project tax savings for the second and subsequent years. The second thru fifth year of a mortgage will have similar tax benefits.
OK now that I got the lawyer crud out of the way some assumptions. Yes, yes I know what assumptions do. A single person and married couple are buying a home. The loan amount is $300,000 with annual property taxes of $2800. Terms are 30 fixed at 5.5%, so monthly payment is $1703.37. OK we have Jane Single (clever a single gal) and Jim Couple and Mary Couple married kids. Both make the same money (proving that women actually do make more than guys) $70,000 and this is taxable income.
From paragraph one above the part that is yes. If you happen to be single your tax benefits are pretty good. Without boring you to tears with numbers and such here it is. As a single person with taxable income of $70,000 you pay $11,513 in federal income taxes. When you deduct the $2800 in property taxes and the $16,399.19 in interest paid you lower your taxes to $8318 from $11,515. This is a saving of $3375 or $281 per month. So yes you do have a tax benefit.
Now the maybe or no part for M/M Couple. They have the sane taxable income in fact the same everything. Before they get their mortgage there taxes are $6896 and after they are $5726. There is a tax savings of $1170 per year of all of $97.50 per month. So the benefit is there buy you can definitely answer maybe or even no.
So Mr. FSBO or Ms. Real Estate Agent what do you tell your client. What do you say when the ask, "Is there a tax benefit when I buy a home with an FHA mortgage?' Now you can definitely say, "Yes or No or Maybe."
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
tweet this!
