The IRS Deductions Blog

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Question: How do you calculate how much tax you can save if you buy a house? ?

Example:
Two unmarried people, one makes $36,000 and one makes $50,000. Purchase a condo for $338,800, 20% down, mortgage of $270,400 with monthly payment of approx $1547 per month. Assuming both people own the property 50% -50% both share title. How much tax deduction can each person have from buying a house, assuming both don’t have kids and no other deductions….

Answer: first off, let me just tell you that while it is true that you pay less in tax if you buy a home, the interest you pay to the bank is way higher than any tax savings. by a lot!!!

so don’t buy a house just for the tax savings…buy it because you want it or need it.

now, i assume that your loan is for 30 years so of your $1547 payment about $700 to $800 is interest. 800(12)= 9,600

so if you are in the 20% tax rate, that is a total tax savings of $1920 that you can divide among yourselves.

but as i said before: note that you had to give the bank $9600 to not give the irs $1920.

i would much rather pay the irs th 2k than a bank 9k…but that’s just me.

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