(Closed) $4k tax rebate just from owning a home?

posted 3 years ago in Finances
Post # 16
Member
733 posts
Busy bee

Don’t forget that in CA property taxes adjust based on the purchase price after you buy the home, so your mortgage will go up. Ours went up 700/mo, but we have a pretty expensive house that hadn’t been sold for 20 years. I just wanted you to be prepared for that.

Also, the mortage deduction is kind of like paying $1 to get 25 cents back. You pay so much in mortgage interest and what you get back in tax decuctions is a pittance comparitively.

Post # 17
Member
3068 posts
Sugar bee
  • Wedding: September 2014

bellanotte11:  It would not be safe to assume that it would not change post marriage. When we married our return was way less because we were in a higher tax bracket. He used to get a lot more back on the house on his single income.  I would just take the tax return out of the equation entirely when you are thinking about purchasing a home. 

 

Post # 19
Member
446 posts
Helper bee
  • Wedding: November 1999

Also consider if you plan on having children and what the cost of childcare might be or the cost of one of you not working.  Where I live the cost of childcare is as much if not more than a mortgage for one child.  You don’t want to be in a situation where you can’t pay a mortgage because of daycare costs.

Post # 22
Member
774 posts
Busy bee

bellanotte11:  Sorry if this is asked and answered, but does mortgage insurance include homeowner’s insurance? I thought PMI was seperate. You do sound like you have developed a good budget though.

Post # 23
Member
7442 posts
Busy Beekeeper

bellanotte11:  so if my math is right an $1800 mortgage payment will leave you with about $1900 left for everything else? Or is it that $1900 will be left after mortgage and other necessities are taken care of? If it’s the former that’s half your take home pay so it would still be pretty high.  How old is the home? If it’s newish you should calculate about 1% of the price as what you’ll need in standard maintenance and repairs. I use 3% personally because my house is 150 years old and we usually use it all each year. 

Post # 24
Member
1051 posts
Bumble bee
  • Wedding: July 2015

bellanotte11:  I haven’t read through all of the comments, so I’m not sure if someone already mentioned this… I would keep in mind that tax rebates and credits change all the time. So, something that’s available in a given year isn’t necessary available the next. Personally, I wouldn’t count on a tax refund.

Post # 28
Member
1414 posts
Bumble bee

Your tax ‘rebate’ is a deduction NOT a credit. Difference being- a deduction lowers your taxable income whereas a credit goes towards amount owed/due.

So let’s assume a 25% tax bracket- A $4000 deduction will result in a $1000 difference in ‘owed taxes’ or what you would get back, whereas a $4000 credit would be just that, $4000 back. So if your tax refund is $500 before – a $4000 deduction will make it $1500 and a $4000 credit will make it $4500.

Mortagage insurance/interest is a deduction NOT a credit, so multiply the ‘rebate’ by whatever your tax bracket is to give you a good idea of what you’d get back.

Also- when owning a home- you need to have a house emergency fund. Because the washing machine won’t wait for you to finish paying off the new roof to break- they’ll break the same day, along with a pipe burst- just how life goes.

Post # 29
Member
1414 posts
Bumble bee

Also- on an older house– the windows/insulation won’t be as good as if you’re currntly living in an apartment (shared walls) – so expect your utilities to go up, unless you plan to put in new windows (we just did this on our reno house, to the tune of $15k!)

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