How much of my interest will I get back on my mortgage?

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Mazeroth
Mazeroth Posts: 1,585
edited July 2007 in The Clubhouse
My wife and I are getting close to buying a house. We've been preapproved for a while and have looked at a few dozen houses. We just found one today we're very excited about and are thinking of putting a bid on it.

Now that you have my life story I was wondering how much of the $9000 in interest will we get back on our tax return? Combined income is in the high 60s this year but should be high 70s in 2008. Also, do you get anything back for property tax? Probably not, but I thought I'd ask! :D

Thanks.
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  • jdhdiggs
    jdhdiggs Posts: 4,305
    edited July 2007
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    Take whatever your peak income tax rate is (I'm guessing yours is around 18%) and multiply it by the amount of interest to get your answer. You get the same back from your property and school taxes as well at the same rate. Don't view it as your getting money back, it's more like the government never considers that you made that money.
    There is no genuine justice in any scheme of feeding and coddling the loafer whose only ponderable energies are devoted wholly to reproduction. Nine-tenths of the rights he bellows for are really privileges and he does nothing to deserve them. We not only acquired a vast population of morons, we have inculcated all morons, old or young, with the doctrine that the decent and industrious people of the country are bound to support them for all time.-Menkin
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  • Mike682
    Mike682 Posts: 2,074
    edited July 2007
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    We bought our house last year at the end of August. Based on my experience so far: If you buy this year, you won't get much back. The reason being by the time you close on the house, you will probably claim at most, a few months of paid mortgage interest on your taxes. You will get much, much more back the following year when you can claim a full year's worth of mortgage interest. Exactly how much, I am not sure
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  • Face
    Face Posts: 14,340
    edited July 2007
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    I believe about a third.
    "He who fights with monsters should look to it that he himself does not become a monster. And when you gaze long into an abyss the abyss also gazes into you." Friedrich Nietzsche
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  • Sami
    Sami Posts: 4,634
    edited July 2007
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    Face wrote: »
    I believe about a third.

    It all depends on your tax bracket like jdhdiggs said. You will lose your standard deduction so roughly (9000 + property tax - 5000ish) * tax percentage.
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  • ohskigod
    ohskigod Posts: 6,502
    edited July 2007
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    Mazeroth wrote: »
    Also, do you get anything back for property tax?
    Thanks.


    Property taxes, as well as mortgage interest, is deductible.

    thats HUGE in NJ (highest prop taxes in the country if i am not mistaken)
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  • reeltrouble1
    reeltrouble1 Posts: 9,312
    edited July 2007
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    You may also deduct any points and any loan origination fee from your gross combined income should you itemize your deductions for the year you purchased the home, you will likely be itemizing once you purchase the home.

    RT1
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  • scottvamp
    scottvamp Posts: 3,277
    edited July 2007
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    I believe it depends on your income tax bracket. I owned a house for ten years and my tax cut was less than two deductions or about 5%. And it gets lower every year. Nothing like the 70's and 80's. No enough money to even do home improvements anymore.......
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  • shepx2
    shepx2 Posts: 646
    edited July 2007
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    thats HUGE in NJ (highest prop taxes in the country if i am not mistaken)

    That may be true, but Texas seems pretty damn bad. It's 3.2% for the city I live in...................
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  • jdhdiggs
    jdhdiggs Posts: 4,305
    edited July 2007
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    All things together, we're pushing 3% here in PA. I wouldn't mind except the city council is lining their own pockets with the education money.
    There is no genuine justice in any scheme of feeding and coddling the loafer whose only ponderable energies are devoted wholly to reproduction. Nine-tenths of the rights he bellows for are really privileges and he does nothing to deserve them. We not only acquired a vast population of morons, we have inculcated all morons, old or young, with the doctrine that the decent and industrious people of the country are bound to support them for all time.-Menkin
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  • reeltrouble1
    reeltrouble1 Posts: 9,312
    edited July 2007
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    Lou,

    NJ taxes are crazy nuts. Ga is much better we only pay a little for snow removal..........j/k taxes in Ga for property are extremely low, maybe Alabama is lower I remember paying 300 a year when I lived there.

    Pa has taxes for being alive.......again nuts, a tax for breathing, I had to pay that damm feudal tax for my job title there too, that was nuts, then a tax so I could work, and a tax for my little dinky municipality, very ingenious folks in Pa. as far as taxes, nobody wants alot, but everybody wants some tax money. Beautiful state though, well, at least outside Philly which still had some fun stuff and all the historic areas, well rant is over.

    RT1
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  • jdhdiggs
    jdhdiggs Posts: 4,305
    edited July 2007
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    My personal favourite tax is the $10 tax for the right to work. WTH is that? I'd have to say out of the states that I'm familiar with, PA has some of the dumbest taxes on record. Montana and Wyoming have the best.
    There is no genuine justice in any scheme of feeding and coddling the loafer whose only ponderable energies are devoted wholly to reproduction. Nine-tenths of the rights he bellows for are really privileges and he does nothing to deserve them. We not only acquired a vast population of morons, we have inculcated all morons, old or young, with the doctrine that the decent and industrious people of the country are bound to support them for all time.-Menkin
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  • Bamadude
    Bamadude Posts: 245
    edited July 2007
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    Mazeroth, check out the 80-20 loan scenario if you are coming to the table with little or no down payment. When set up correctly it avoids mortgage insurance (not tax deductible) and lets you pay extra interest instead which is tax deductible. The monthly payment is usually the same as a 100% loan, but you get a better tax refund and the ability to pay off the 20% loan early leaving you with a lower house note. This is really working out for me. Again this is only an option if you're borrowing close to 100%.

    Here's more info.

    http://www.bankrate.com/brm/news/mortgages/20031113a1.asp

    Also see my posts in this thread.

    http://www.polkaudio.com/forums/showthread.php?p=661376#post661376

    Good luck!
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  • jdhdiggs
    jdhdiggs Posts: 4,305
    edited July 2007
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    It works at any percentage. Our first house was setup as a 10 down-10 second loan-80 morgage and a friend did a 5-15-80. Your trading PMI for a higher interest rate on the small morgage, but as Bama said, you can pay it off quickly and leave yourself better off than the 100% and PMI.
    There is no genuine justice in any scheme of feeding and coddling the loafer whose only ponderable energies are devoted wholly to reproduction. Nine-tenths of the rights he bellows for are really privileges and he does nothing to deserve them. We not only acquired a vast population of morons, we have inculcated all morons, old or young, with the doctrine that the decent and industrious people of the country are bound to support them for all time.-Menkin
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  • krabby5
    krabby5 Posts: 923
    edited July 2007
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    Mazeroth wrote: »
    My wife and I are getting close to buying a house. We've been preapproved for a while and have looked at a few dozen houses. We just found one today we're very excited about and are thinking of putting a bid on it.

    Now that you have my life story I was wondering how much of the $9000 in interest will we get back on our tax return? Combined income is in the high 60s this year but should be high 70s in 2008. Also, do you get anything back for property tax? Probably not, but I thought I'd ask! :D

    Thanks.

    your first few years you will have a TON of mortgage interest for your taxes...your payments early on will mostly go to interest..
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  • krabby5
    krabby5 Posts: 923
    edited July 2007
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    shepx2 wrote: »
    That may be true, but Texas seems pretty damn bad. It's 3.2% for the city I live in...................

    you also have ZERO income tax, though
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  • phuz
    phuz Posts: 2,372
    edited July 2007
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    krabby5 wrote: »
    you also have ZERO income tax, though

    And between 7.25 and 8.5 percent sales tax.
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  • Sami
    Sami Posts: 4,634
    edited July 2007
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    shepx2 wrote: »
    That may be true, but Texas seems pretty damn bad. It's 3.2% for the city I live in...................

    Sure but have you compared the house prices? :)

    I just bought a second home, 2002, 2900 sq.ft., 4br, 2.5b, pool on 1/4 acre for $235k. My total monthly including insurance and property tax is $2k. Of course this time of the year electricity is adding another $5-600 a month but that's minor when you're floating in the pool drinking frozen 'ritas.
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  • wallstreet
    wallstreet Posts: 1,405
    edited July 2007
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    It's a nice deduction for sure. In my case, it's so nice they now ding me on the alternative minimum tax (AMT).
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  • krabby5
    krabby5 Posts: 923
    edited July 2007
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    phuz wrote: »
    And between 7.25 and 8.5 percent sales tax.

    I pay about 7%...
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