Tax benefits for buying a home in Massachusetts

One of the best ways to save on taxes is to own your own home.  I encourage you to consult an accountant or tax advisor to discuss your personal situation prior to deciding to purchase a property in order to get a full understanding on how much you are going to save.

In order to understand where the tax benefits from owning your own home (single family house or condominium) come from, please review the following information regarding a mortgage payment:

Monthly mortgage payment:

P.I.T.I. = Principal.Interest.Taxes.Insurance

     Principal = money your borrowed

            Interest = % amount charged to borrow the money

            Taxes = Property Taxes = 1/12 of the annual tax bill

            Insurance = Homeowner's Insurance = 1/12 of the annual bill

P.I.T. + condo fee = Principal.Interest.Taxes + condo fee

            (P..T. see above explanation)

            Condo Fee = monthly amount of the condo's share in common

expenses for the association

Benefits:

Considered a "loss" and is therefore deductible

No Benefits:

Important Facts about Mortgages

 not calculate the net payment after tax benefits.

statement with the amount of interest paid by the borrower along with

the amount of principal paid or balance of the mortgage at the end of

the year.  The borrower then must use this information on their tax returns.

Example 1 (assuming a 28% tax bracket for the property owner)

Condo priced at $350,000 with a mortgage of $280,000 @ 6% interest over 30 years, the PI is $1,678.74. The property taxes are $2,400/year or $200/mont

            Monthly payment (PIT)= $1,878.74          

            Approx. Tax Benefit from interest portion =$389.80

               Total interest paid in year 1 of mortgage = $16,705.71

               Monthly amount of interest paid is $16,705.71 divided by 12 = $1,392.14

               Tax Bracket of 28% results in a savings of $389.80 (.28 x 1,392.14)   

            Tax Benefit from property taxes =  $56 (.28 x 200 = 56)                                  

            Total Monthly Tax Savings = $445.80 ($389.80 + $56

            Total Monthly Payment after tax savings = $1,878.74 - $445.80 = $1,432.94

 

ALL INFORMATION SUBJECT TO ERROR AND OMISSION. ALL NUMBERS SUBJECT TO VERIFICATION.  PLEASE CONSULT A TAX ADVISOR FOR YOUR PERSONAL INFORMATION

The best way for you to determine the mortgage amount you can qualify for and then to determine your total tax savings is to consult the professionals.  Our NE Moves Mortgage Representative are available to offer you a free, no obligation pre-approval for your mortgage.  You can then take this information to your tax specialist to determine your tax savings.  Once you are ready to buy your home, I am ready to help you.  Please call me.