We’re talking about the things
that you can write off on your income taxes every year as it relates to your
People ask me all the time, “Michelle
I’m about to become a homeowner and I've heard that I’m going to get a big tax break
so what does that look like?” Well, there are three things that you get to
write off generally every year on your taxes as relates to your home. Those are
the insurance that you pay on your home, your county real estate tax and the
interest that you pay on your mortgage loan.
Now, the interest that you pay
on your mortgage loan is likely the larger of those three deductions so let's
just break it down. Let's say that you pay 800 a month in interest in your
mortgage payment and you can figure this out by looking at your mortgage
statement and it will tell you how much of that payment is your interest, but
for the sake of this exercise, we're going to say it's $800.
So, take that 800 and multiply
it by 12 and you get $9,600. So $9,600 is the amount that you can write off on
your income tax. Now, if you're in a 22% tax bracket, 22% of 9,600 is around 2,100
so 2100 is your tax savings. It's the money you would have spent in taxes if you
didn't have that tax write-off.
Now, if you take that 2,100
and let's break it down by month divided by 12 and you'll get about 175 dollars.
So what is it that you could pay with $175 every month, maybe it's your electric
bill, maybe it's your cell phone bill, maybe it's a combination of some smaller
bills, it's a significant savings every month. It's money that's not going to
the IRS. It's staying in your pocket to pay for things that are important to you.
So that's how we break it down. Congratulations on being a homeowner, now go do
the math and figure out your savings.