In Bozeman data from 2017 shows renting a newer apartment sized at 950 square feet with 1 ½ -2 full bathrooms runs about $1022 per month.* Totaling out at $12,264 for the year none of this is deductible on your income taxes.
New tax guidelines will be in effect for 2018. But our research shows that most first time home buyers can still realize benefits at tax time. Interest on a mortgage is deductible. For the full deduction keep your mortgage below $750,000 and itemize on your tax return.
Tax deductions work to reduce your taxable income. Deductions are a percentage based on your taxable income bracket. Details vary from person to person and consulting a tax expert is important.
The below tables show two different purchase prices of $420,000 and $450,000 with two different tax brackets of 22% and 24%.
Purchase Price $420,000k
| IRS Tax Bracket 2018 |
Beginning Loan Balance |
Interest |
First Year Tax Savings |
| 22% |
$420,000 |
4.26% |
$3,906 |
| 24% |
$420,00 |
4.26% |
$4,261 |
Purchase Price $450,000k
| IRS Tax Bracket 2018 |
Beginning Loan Balance |
Interest |
First Year Tax Savings |
| 22% |
$450,000 |
4.26% |
$4,185 |
| 24% |
$450,00 |
4.26% |
$4,566 |
Home buyers are charged fees to obtain a mortgage. These fees are called points. Part of home mortgage interest these points may also be deductible as long as they meet IRS guidelines. Take a look at the IRS Home Mortgage Points for more information.
Calc XML has a great tool to use which helps calculate your tax savings. Hint: Click on ‘details’ for a readable format versus the graph.
For a better understanding of the current rates, take a look at the Montana Mortgage Rates by Nerd Wallet.
*Prospera 2018 Economic Profile
Remember that each home buying process will vary greatly from person to person. The numbers listed above are only used as an example. For further information about mortgages, check out our page on Everything You Need to Know About Mortgages, blogs below, download our Guide to Home Equity Line of Credit, or call us at RMCU today!
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