Let's assume you're in the 28% tax bracket for a moment (leaving off considerations of state taxes). We'll also assume you took out a $500,000 30-year fixed-rate-mortgage at 6.5% in a relatively recent purchase of your personal residence. What, specifically, are some of the tax benefits your home will provide?



Your first year interest payments−the highest over the life of the loan−will amount to $32,335. (I assume I have your attention here and, yes, that's $32,335.) This rather dismaying interest burden is eased significantly, though, because the deductibility of that interest obligation could cut your personal income tax liability by over $9,000.



How about property taxes and points? Let's assume you paid two points to originate your loan. That $10,000 is deductible in the year of purchase (not so if we're talking about a loan refinancing, which dances to different tax rules). You can also deduct your property taxes in their entirety.



And remember−you can exempt up to $500,000 in proceeds on the sale of this home from taxation if you are married and file jointly (up to $250,000 if you file solo). That's potentially a tremendous amount of untaxed capital gains, and it could mean thousands of dollars in added profits. For assistance call Beth at 425-450-5208.