INCOME TAX BENEFITS OF HOME OWNERSHIP:The following link is a good summary of the tax benefits of home ownership, including a discussion of the tax deductibility of mortgage interest, property taxes, and other issues: http://www.finance.cch.com/text/c20s15d690.asp
To estimate the tax benefits of your proposed home purchase compared to renting, click here.You should use the "marginal" tax rate, which is the tax rate that your last dollar earned during the year is taxed at. Use the IRS tax table to estimate your marginal rate (look at the table and use the rate for your total taxable income you expect for the year) based on whether you are single, married or head of household. This will give you an estimate of the tax savings you will enjoy compared to if you were to take the standard deduction for federal purposes (the calculator includes points paid to the lender in the first year--your tax benefits in future years will be less). The program asks you to input the state tax rate. You should, of course, consult with your own tax professional in evaluating the tax ramifications of your home purchase and should not rely on these calculations in making your home purchase decision.
**NOTE: The information contained at this site is for educational purposes only and is not intended for any particular person or circumstance. A competent tax professional should always be consulted before utilizing any of the information contained at this site.**
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.