Mortgage Tax Benefit: What's the Real Value of Your Mortgage?

MORTGAGE TAX BENEFIT: 田 What's the Real Value of Your Mortgage? Your home is likely your biggest investment, so knowing exactly what you're paying for it is just common sense. But when people map out the life of their mortgage, they often fail to consider the copious tax benefits they will receive. We take a look at three home-buyer scenarios to determine just how much they will receive in tax benefits over the life of their loan, and the total amount they will have paid when their loan is finally over. Also included is the cutoff point of each filing status for when the standard tax deduction becomes more than the itemized deduction. SAMANTHA PROFILE #1 30 YEAR LOAN / INTEREST RATE: 5% ANNUAL TAX BENEFIT OVER 30 YEARS LOAN AMOUNT: $150,000 $1.2K I HOH TAKE STANDARD MARGINAL FEDERAL TAX RATE: 15% $1K SINGLE / MFS TAKE STANDARD TAX BENEFITS VS NO TAX BENFITS $800 AMOUNT OF INTEREST PAID ABOVE PRINCIPAL 150k x $600 120k 90k E $400 60k 30k $200 30 YEARS • PRE-TAX INTEREST COST $139,884 1 2 3 4 5 6 7 8 9 3 4 5 6 7 8 9 0 1 2 3 45 6 7 8 90 • AFTER-TAX INTEREST COST YEAR $118,901 Take Itemized Deduction Take Standard Deduction AMOUNT SAVED IN TAXES ABOVE (ALL) Q 00 THE STANDARD BENEFIT OVER THE LIFE OF THE LOAN: MARRIED-FILING JOINTLY HEAD OF HOUSEHOLD OR WIDOWED ($11,900) SINGLE, OR MARRIED-FILING SEPARATELY ($5,950) ($8,900) $1,382 (filing status: single) Tax bracket: 15% / Monthly Payment: $805 JOAN AND JACK PROFILE #2 30 YEAR LOAN / INTEREST RATE: 5% ANNUAL TAX BENEFIT OVER 30 YEARS LOAN AMOUNT: $400,000 $6K MARGINAL FEDERAL TAX RATE: 28% $5K TAX BENEFITS VS NO TAX BENFITS $4K MARRIED-FJ TAKE STANDARD AMOUNT OF INTEREST PAID ABOVE PRINCIPAL $600K HOH TAKE STANDARD $3K $500K $400K SINGLE / MFS TAKE STANDARD $2K $300K $200K $100K $1K 30 YEARS • PRE-TAX INTEREST COST 1 2 2 7 8 9 0 1 2 2 2 2 5 6 7 89 $373,023 1 2 3 4 5 6 7 8 9. O 1 2 3 4 5 6 • AFTER-TAX INTEREST COST YEAR $268,577 Take Itemized Deduction Take Standard Deduction AMOUNT SAVED IN TAXES ABOVE (ALL) THE STANDARD BENEFIT OVER THE LIFE OF THE LOAN: MARRIED-FILING JOINTLY HEAD OF HOUSEHOLD OR WIDOWED ($11,900) SINGLE, OR MARRIED-FILING SEPARATELY ($5,950) ($8,900) $40,632 (filing status: HOH) Tax bracket: 28% / Monthly Payment: $2,147 ALLEN AND AMANDA PROFILE #3 30 YEAR LOAN / INTEREST RATE: 5% ANNUAL TAX BENEFIT OVER 30 YEARS LOAN AMOUNT: $750.000 $15K | MARGINAL FEDERAL TAX RATE: 35% $12K TAX BENEFITS VS NO TAX BENFITS MARRIED-FJ TAKE STANDARD AMOUNT OF INTEREST PAID ABOVE PRINCIPAL $9K 800k НОн 700k TAKE STANDARD 600k 500k $6K SINGLE / MFS TAKE STANDARD 400k 300k 200k 100k $3K 30 YEARS • PRE-TAX INTEREST COST 1 1 1 2 2 2 0 1 2 3 4 5 6 7 890 1 2 3 4 5 67 $699,418 1 2 3 4 56 7 8 9 2 2 YEAR • AFTER-TAX INTEREST COST $454,622 Take Itemized Deduction Take Standard Deduction AMOUNT SAVED IN TAXES ABOVE (ALL) Q 00 THE STANDARD BENEFIT OVER THE LIFE OF THE LOAN: MARRIED-FILING JOINTLY HEAD OF HOUSEHOLD OR WIDOWED SINGLE, OR MARRIED-FILING SEPARATELY ($5.950) ($8,900) $130,919 ($11,900) (filing status: married filing jointly) Tax bracket: 35% / Monthly payment: $4,026 credit sesame <- TAx OEzwwHT Azz>AL TAX BENEEHT