Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Did you take into account the tax deduction when deciding how much house you could afford?
I feel like a totally newbie for not even considering it when working up our budget. I doubt we would up our max at this point because we are comfortable there, but I was just wondering what other people did.
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Re: Did you take into account the tax deduction when deciding how much house you could afford?
No. The home ownership deductions are just a tiny fraction back of what you've spent. If you have an accountant, give him a call and see what it would be for you - I bet it's barely a drop in the bucket.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
my MIL keeps saying it's going to make a huge difference for DH and I, but I am not sure...we both currently withhold at a single rate, claim 0, and have some extra withheld...
Eh, I never get the taxes "game" right anyways...I've tried the IRS calculator and ended up pretty far off...
In short, I share your situation
This. We both claim 0, have additional money withheld, and still owe at the end of the year even with our interest deductions. Welcome to 2 professionals with no kids.
Koosh, atl, you're both saying that you were crunching the numbers on deductions during the house shopping process and that it was a factor in deciding your limits and which houses to consider?
I think to a certain extent, if you're looking at houses in maybe a $25k spread, the difference btwn a $340k house and $357k house will have very little tax impact.
And I'm not saying I don't take the deduction, because I do, just that it's never been a factor. We're DINKs and get large refunds every year.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
We went from a 1K/mo mortgage to over 3K/mo and while we could afford that, I can't imagine not crunching the numbers to find a budget before. The tax benefit is over 20K/yr so yeah, that's a lot. This is the only deduction we have. I can't even deduct an IRA. We both claim 0 and either break even or have to pay.
It was never a question if we could afford the house and food but it was a question if we could afford 3 vacations a year or just 2.
We bought the most expensive house we were comfortable buying. Because we have no deductions for children and mortgage interest is our largest deduction we were okay with a larger number. It was definitely something we thought about but we didn't go so far as to crunch numbers if that makes any sense.
We are poster children for the marriage penalty. Like I said before, we claim single, 0, with additional held back and we still owe and pay quarterly. I can't imagine how much worse it would be without the mortgage interest and itemization.
There has been but I seriously doubt it would pass. We will see though. It's our only deduction left.
No.
I think this would be the final nail in the coffin for the housing market. I don't think it would pass.
**raising hand** happens to two professionals WITH kids too. Grumble.
I totally agree. I can't think of any instance where it would be significant.
I suspect they will either (1) limit the mortgage interest deduction up to the interest on a $500K loan, or (2) limit itemized deductions based on income or set a ceiling on the total deduction (which would affect other deductions like charity).
Yes, I believe option 2 is already in the works.
We save over 500/mo in taxes from the mortgage. I don't consider that tiny though.
See, this is kind of where I am at. It will be less than that for us, but still significant (around $20,000 in interest and $7000 in taxes the first year). But I think looking at that as extra money for savings or maybe a vacation is a better idea than counting on it to pay the bills.
We ignored tax deductions when buying our house.
In order to take advantage of the mortgage interest and property tax deduction --- you must be able to itemize and that amount has to be more than the standard deduction. At that point you will get back a portion of the total mortgage interest and taxes paid. (Ex. 1000 over standard deduction amount = 280 back if you are in the 28% tax bracket.
With today's low interests rates, more and more people will find themselves unable to write off any housing expenses. Not to mention that there is talk of eliminating such deductions for those making 200K (or is it 250K) -- and soon it will be everyone.
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I agree. Plus, deciding between say a $400k house vs a $500k house, the tax deduction difference is nothing. I don't see how tax deduction would affect how much house to buy.
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