Tax Relief on Mortgages
Hoping for some help from home owners out there. We are currently possibly close to buying our first property in the US. We understand that there is tax relief on the first 10k of property tax and that you can get tax relief on the interest you pay on a mortgage. That is correct isn’t it? We are based in NJ. Is there a way of roughly understanding what that tax relief would work out at? I am sure this is super obvious but just sadly not to me!! Thanks for the help, as always. |
Re: Tax Relief on Mortgages
Originally Posted by Ecto17
(Post 12776586)
Hoping for some help from home owners out there. We are currently possibly close to buying our first property in the US. We understand that there is tax relief on the first 10k of property tax and that you can get tax relief on the interest you pay on a mortgage. That is correct isn’t it? We are based in NJ. Is there a way of roughly understanding what that tax relief would work out at? I am sure this is super obvious but just sadly not to me!! Thanks for the help, as always. you get some credit on the interest up to a certain amount / limit. no way anyone can guess without knowing your income and all your expenses and personal situation. There are free apps online that let you put in your numbers and get an answer. |
Re: Tax Relief on Mortgages
Thank you for your help. what does SALT mean and W2? |
Re: Tax Relief on Mortgages
SALT = State and Local Taxes
W2 = The form you get from your employer if you are an employee that shows your earnings and tax deducted This is very simplified but in incredibly basic terms... You have to itemize your deductions to take the mortgage interest deduction. It's now capped at $750,000 of borrowing down from $1m (thanks Trump) and assuming you're married filing jointly the standard deduction is $24,400 for 2019 anyway. Presumably you'll hit the $10,000 cap on SALT (thanks Trump) because it's NJ so you'd need over $14,400 in deductible mortgage interest before you get any "benefit" from itemizing and deducting mortgage interest. Anything over that will reduce your taxable income further so you'll pay less tax. It's not going to save you a fortune but you might get some benefit. |
Re: Tax Relief on Mortgages
Calculate both ways - itemized and standard. Figure out which is the best and then go with that. For majority of people standard is now the way to go, but there may be some circumanstances that warrant itemizing.
There may be programs in your state for first time home buyers that are outside of this. |
Re: Tax Relief on Mortgages
Thank you both, that is really helpful! |
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