Costs
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Mortgage, at current rates you will pay about $425 per month for every $100,000 of debt. This cost is fixed for the length of the lock rate of the loan.
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Taxes and common charges (billed as Maintenance in co-ops) are set costs that usually go up 1-5% each year.
Deductions
- 100% of interest payments of total interest on $750,000 of a mortgage for a primary residence.
- $10,000 of taxes per year on your primary residence.
How deductions work
Annually you pay income taxes. You pay these taxes based on your income. If your income is $100,000 for a year and your tax bracket is at 40% then you pay $40,000 in taxes.
To realize the tax benefits of owning a home take your tax deductions from your primary residence and reduce your income by that amount. So if you earn $100,000 but you have $10,000 in tax deductions for real estate you will only pay taxes on $90,000 of income. If your tax becket is 40% then you will pay $36,000. You are saving $4,000 in this scenario.
How to calculate your deductions
- Taxes are easy, it’s what your tax payments for the year are, up to 10K.
- Interest, for the first several years interest will make up about 75% of your mortgage payments. Here is a great interest payment calculator you can use HERE.
Example:
